Correlation Between Bassett Furniture and 09951LAA1

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Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and 09951LAA1 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 09951LAA1 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 BOOZ ALLEN HAMILTON, you can compare the effects of market volatilities on Bassett Furniture and 09951LAA1 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 09951LAA1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and 09951LAA1.

Diversification Opportunities for Bassett Furniture and 09951LAA1

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bassett and 09951LAA1 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and BOOZ ALLEN HAMILTON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOOZ ALLEN HAMILTON 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 09951LAA1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOOZ ALLEN HAMILTON has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and 09951LAA1 go up and down completely randomly.

Pair Corralation between Bassett Furniture and 09951LAA1

Given the investment horizon of 90 days Bassett Furniture Industries is expected to under-perform the 09951LAA1. In addition to that, Bassett Furniture is 1.79 times more volatile than BOOZ ALLEN HAMILTON. It trades about -0.06 of its total potential returns per unit of risk. BOOZ ALLEN HAMILTON is currently generating about 0.03 per unit of volatility. If you would invest  9,597  in BOOZ ALLEN HAMILTON on October 7, 2024 and sell it today you would earn a total of  71.00  from holding BOOZ ALLEN HAMILTON or generate 0.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy68.29%
ValuesDaily Returns

Bassett Furniture Industries  vs.  BOOZ ALLEN HAMILTON

 Performance 
       Timeline  
Bassett Furniture 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 newest stock price uproar, may contribute to short-horizon losses for the private investors.
BOOZ ALLEN HAMILTON 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BOOZ ALLEN HAMILTON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 09951LAA1 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Bassett Furniture and 09951LAA1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bassett Furniture and 09951LAA1

The main advantage of trading using opposite Bassett Furniture and 09951LAA1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, 09951LAA1 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 09951LAA1 will offset losses from the drop in 09951LAA1's long position.
The idea behind Bassett Furniture Industries and BOOZ ALLEN HAMILTON 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 Stocks Directory module to find actively traded stocks across global markets.

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