Correlation Between Bassett Furniture and Daily Journal

Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Daily Journal 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 Daily Journal 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 Daily Journal Corp, you can compare the effects of market volatilities on Bassett Furniture and Daily Journal 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 Daily Journal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Daily Journal.

Diversification Opportunities for Bassett Furniture and Daily Journal

0.53

Correlation Coefficient

Bassett Furniture  Daily Journal

Very weak diversification

The 3 months correlation between Bassett and Daily is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Daily Journal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daily Journal Corp 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 Daily Journal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daily Journal Corp has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Daily Journal go up and down completely randomly.

Pair Corralation between Bassett Furniture and Daily Journal

Given the investment horizon of 90 days Bassett Furniture Industries is expected to under-perform the Daily Journal. In addition to that, Bassett Furniture is 1.08 times more volatile than Daily Journal Corp. It trades about -0.18 of its total potential returns per unit of risk. Daily Journal Corp is currently generating about 0.0 per unit of volatility. If you would invest  57,260  in Daily Journal Corp on September 27, 2024 and sell it today you would lose (241.00) from holding Daily Journal Corp or give up 0.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bassett Furniture Industries  vs.  Daily Journal Corp

Bassett Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bassett Furniture Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Bassett Furniture is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Daily Journal Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daily Journal Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Daily Journal displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bassett Furniture and Daily Journal

The main advantage of trading using opposite Bassett Furniture and Daily Journal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Daily Journal 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 Daily Journal will offset losses from the drop in Daily Journal's long position.

The idea behind Bassett Furniture Industries and Daily Journal Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.