Correlation Between Bassett Furniture and Envista Holdings

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

Diversification Opportunities for Bassett Furniture and Envista Holdings

0.85

Correlation Coefficient

Bassett Furniture  Envista Holdings

Very poor diversification

The 3 months correlation between Bassett and Envista is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Envista Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envista Holdings 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 Envista Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envista Holdings Corp has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Envista Holdings go up and down completely randomly.

Pair Corralation between Bassett Furniture and Envista Holdings

Given the investment horizon of 90 days Bassett Furniture Industries is expected to under-perform the Envista Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Bassett Furniture Industries is 1.08 times less risky than Envista Holdings. The stock trades about -0.09 of its potential returns per unit of risk. The Envista Holdings Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,999  in Envista Holdings Corp on October 11, 2024 and sell it today you would lose (82.00) from holding Envista Holdings Corp or give up 4.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Bassett Furniture Industries  vs.  Envista Holdings Corp

Bassett Furniture

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bassett Furniture Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Bassett Furniture is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Envista Holdings Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Envista Holdings Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Envista Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bassett Furniture and Envista Holdings

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

The idea behind Bassett Furniture Industries and Envista Holdings 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.