Correlation Between Interpublic Group and Bassett Furniture

Can any of the company-specific risk be diversified away by investing in both Interpublic Group and Bassett Furniture 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 Interpublic Group and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Interpublic Group of and Bassett Furniture Industries, you can compare the effects of market volatilities on Interpublic Group and Bassett Furniture 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 Interpublic Group with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interpublic Group and Bassett Furniture.

Diversification Opportunities for Interpublic Group and Bassett Furniture

0.03

Correlation Coefficient

Interpublic Group  Bassett Furniture

Significant diversification

The 3 months correlation between Interpublic and Bassett is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Interpublic Group 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 Interpublic Group of are associated (or correlated) with Bassett Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bassett Furniture has no effect on the direction of Interpublic Group i.e., Interpublic Group and Bassett Furniture go up and down completely randomly.

Pair Corralation between Interpublic Group and Bassett Furniture

Considering the 90-day investment horizon Interpublic Group of is expected to under-perform the Bassett Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Interpublic Group of is 1.23 times less risky than Bassett Furniture. The stock trades about -0.02 of its potential returns per unit of risk. The Bassett Furniture Industries is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,662  in Bassett Furniture Industries on October 11, 2024 and sell it today you would lose (266.00) from holding Bassett Furniture Industries or give up 16.0% of portfolio value over 90 days.

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

Interpublic Group of  vs.  Bassett Furniture Industries

Interpublic Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Interpublic Group and Bassett Furniture

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

The idea behind Interpublic Group of and Bassett Furniture Industries 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.