Correlation Between Kontoor Brands and Bassett Furniture
Can any of the company-specific risk be diversified away by investing in both Kontoor Brands 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 Kontoor Brands and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kontoor Brands and Bassett Furniture Industries, you can compare the effects of market volatilities on Kontoor Brands 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 Kontoor Brands with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and Bassett Furniture.
Diversification Opportunities for Kontoor Brands and Bassett Furniture
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kontoor and Bassett is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Kontoor Brands 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 Kontoor Brands 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 Kontoor Brands i.e., Kontoor Brands and Bassett Furniture go up and down completely randomly.
Pair Corralation between Kontoor Brands and Bassett Furniture
Considering the 90-day investment horizon Kontoor Brands is expected to generate 1.22 times more return on investment than Bassett Furniture. However, Kontoor Brands is 1.22 times more volatile than Bassett Furniture Industries. It trades about 0.17 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about 0.2 per unit of risk. If you would invest 8,563 in Kontoor Brands on September 1, 2024 and sell it today you would earn a total of 615.00 from holding Kontoor Brands or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kontoor Brands vs. Bassett Furniture Industries
Performance |
| Timeline |
| Kontoor Brands |
| Bassett Furniture |
Kontoor Brands and Bassett Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kontoor Brands and Bassett Furniture
The main advantage of trading using opposite Kontoor Brands and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kontoor Brands 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.| Kontoor Brands vs. VF Corporation | Kontoor Brands vs. Levi Strauss Co | Kontoor Brands vs. Columbia Sportswear | Kontoor Brands vs. Oxford 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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