Correlation Between Bassett Furniture and Willis Lease
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Willis Lease 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 Willis Lease 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 Willis Lease Finance, you can compare the effects of market volatilities on Bassett Furniture and Willis Lease 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 Willis Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Willis Lease.
Diversification Opportunities for Bassett Furniture and Willis Lease
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bassett and Willis is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Willis Lease Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Lease Finance 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 Willis Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Lease Finance has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Willis Lease go up and down completely randomly.
Pair Corralation between Bassett Furniture and Willis Lease
Given the investment horizon of 90 days Bassett Furniture is expected to generate 1.75 times less return on investment than Willis Lease. But when comparing it to its historical volatility, Bassett Furniture Industries is 3.47 times less risky than Willis Lease. It trades about 0.26 of its potential returns per unit of risk. Willis Lease Finance is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 18,154 in Willis Lease Finance on August 27, 2024 and sell it today you would earn a total of 2,572 from holding Willis Lease Finance or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Willis Lease Finance
Performance |
| Timeline |
| Bassett Furniture |
| Willis Lease Finance |
Bassett Furniture and Willis Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Willis Lease
The main advantage of trading using opposite Bassett Furniture and Willis Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Willis Lease 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 Willis Lease will offset losses from the drop in Willis Lease'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 |
| Willis Lease vs. PROG Holdings | Willis Lease vs. McGrath RentCorp | Willis Lease vs. Mega Matrix Corp | Willis Lease vs. FTAI Aviation Ltd |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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