Correlation Between Bassett Furniture and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Western Acquisition at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bassett Furniture and Western Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bassett Furniture Industries and Western Acquisition Ventures, you can compare the effects of market volatilities on Bassett Furniture and Western Acquisition and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bassett Furniture with a short position of Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Western Acquisition.
Diversification Opportunities for Bassett Furniture and Western Acquisition
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bassett and Western is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition and Bassett Furniture is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bassett Furniture Industries are associated (or correlated) with Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Western Acquisition go up and down completely randomly.
Pair Corralation between Bassett Furniture and Western Acquisition
Given the investment horizon of 90 days Bassett Furniture Industries is expected to generate 0.83 times more return on investment than Western Acquisition. However, Bassett Furniture Industries is 1.2 times less risky than Western Acquisition. It trades about 0.26 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about -0.17 per unit of risk. If you would invest 1,362 in Bassett Furniture Industries on August 27, 2024 and sell it today you would earn a total of 132.00 from holding Bassett Furniture Industries or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Western Acquisition Ventures
Performance |
| Timeline |
| Bassett Furniture |
| Western Acquisition |
Bassett Furniture and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Western Acquisition
The main advantage of trading using opposite Bassett Furniture and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Western Acquisition can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Western Acquisition will offset losses from the drop in Western Acquisition's long position.| Bassett Furniture vs. Hooker Furniture | Bassett Furniture vs. Flexsteel Industries | Bassett Furniture vs. Haverty Furniture Companies | Bassett Furniture vs. La Z Boy Incorporated |
| Western Acquisition vs. PowerUp Acquisition Corp | Western Acquisition vs. Aurora Innovation | Western Acquisition vs. HUMANA INC | Western Acquisition vs. Aquagold International |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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