Correlation Between Ross Stores and Bassett Furniture
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Bassett Furniture Industries, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Bassett Furniture.
Diversification Opportunities for Ross Stores and Bassett Furniture
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ross and Bassett is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and Bassett Furniture go up and down completely randomly.
Pair Corralation between Ross Stores and Bassett Furniture
Given the investment horizon of 90 days Ross Stores is expected to generate 0.68 times more return on investment than Bassett Furniture. However, Ross Stores is 1.48 times less risky than Bassett Furniture. It trades about 0.06 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about 0.01 per unit of risk. If you would invest 11,152 in Ross Stores on September 5, 2024 and sell it today you would earn a total of 4,220 from holding Ross Stores or generate 37.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. Bassett Furniture Industries
Performance |
| Timeline |
| Ross Stores |
| Bassett Furniture |
Ross Stores and Bassett Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Bassett Furniture
The main advantage of trading using opposite Ross Stores and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
| Bassett Furniture vs. Flexsteel Industries | Bassett Furniture vs. Crown Crafts | Bassett Furniture vs. MasterBrand | Bassett Furniture vs. MillerKnoll |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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