Correlation Between Bassett Furniture and SL Green

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

Diversification Opportunities for Bassett Furniture and SL Green

-0.66

Correlation Coefficient

Bassett Furniture  SL Green

Excellent diversification

The 3 months correlation between Bassett and SLG is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and SL Green go up and down completely randomly.

Pair Corralation between Bassett Furniture and SL Green

Given the investment horizon of 90 days Bassett Furniture Industries is expected to generate 0.92 times more return on investment than SL Green. However, Bassett Furniture Industries is 1.09 times less risky than SL Green. It trades about 0.14 of its potential returns per unit of risk. SL Green Realty is currently generating about -0.09 per unit of risk. If you would invest  1,371  in Bassett Furniture Industries on December 24, 2024 and sell it today you would earn a total of  227.00  from holding Bassett Furniture Industries or generate 16.56% return on investment over 90 days.

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

Bassett Furniture Industries  vs.  SL Green Realty

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 11 (%) 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.

SL Green Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Bassett Furniture and SL Green

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

The idea behind Bassett Furniture Industries and SL Green Realty 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.