Correlation Between Crown Crafts and Bassett Furniture
Can any of the company-specific risk be diversified away by investing in both Crown Crafts and Bassett Furniture 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 Crown Crafts and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Crafts and Bassett Furniture Industries, you can compare the effects of market volatilities on Crown Crafts and Bassett Furniture 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 Crown Crafts with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Crafts and Bassett Furniture.
Diversification Opportunities for Crown Crafts and Bassett Furniture
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Crown and Bassett is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Crown Crafts and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Crown Crafts 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 Crown Crafts are associated (or correlated) with Bassett Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bassett Furniture has no effect on the direction of Crown Crafts i.e., Crown Crafts and Bassett Furniture go up and down completely randomly.
Pair Corralation between Crown Crafts and Bassett Furniture
Given the investment horizon of 90 days Crown Crafts is expected to under-perform the Bassett Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Crown Crafts is 2.08 times less risky than Bassett Furniture. The stock trades about -0.01 of its potential returns per unit of risk. The Bassett Furniture Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,375 in Bassett Furniture Industries on November 2, 2024 and sell it today you would earn a total of 87.00 from holding Bassett Furniture Industries or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Crafts vs. Bassett Furniture Industries
Performance |
| Timeline |
| Crown Crafts |
| Bassett Furniture |
Crown Crafts and Bassett Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Crafts and Bassett Furniture
The main advantage of trading using opposite Crown Crafts and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Crafts position performs unexpectedly, Bassett Furniture 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 Bassett Furniture will offset losses from the drop in Bassett Furniture's long position.| Crown Crafts vs. Bassett Furniture Industries | Crown Crafts vs. Hooker Furniture | Crown Crafts vs. Natuzzi SpA | Crown Crafts vs. Flexsteel Industries |
| Bassett Furniture vs. Hooker Furniture | Bassett Furniture vs. Flexsteel Industries | Bassett Furniture vs. Haverty Furniture Companies | Bassett Furniture vs. La Z Boy Incorporated |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |