Correlation Between Bassett Furniture and Fly E

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

Diversification Opportunities for Bassett Furniture and Fly E

-0.46

Correlation Coefficient

Bassett Furniture  Fly E

Very good diversification

The 3 months correlation between Bassett and Fly is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Fly E Group, Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fly E Group, 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 Fly E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fly E Group, has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Fly E go up and down completely randomly.

Pair Corralation between Bassett Furniture and Fly E

Given the investment horizon of 90 days Bassett Furniture is expected to generate 1.58 times less return on investment than Fly E. But when comparing it to its historical volatility, Bassett Furniture Industries is 4.35 times less risky than Fly E. It trades about 0.11 of its potential returns per unit of risk. Fly E Group, Common is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  47.00  in Fly E Group, Common on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Fly E Group, Common or generate 0.0% return on investment over 90 days.

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

Bassett Furniture Industries  vs.  Fly E Group, Common

Bassett Furniture

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bassett Furniture Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Bassett Furniture unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fly E Group,

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fly E Group, Common are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Fly E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bassett Furniture and Fly E

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

The idea behind Bassett Furniture Industries and Fly E Group, Common 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.