Correlation Between Pembina Pipeline and Bassett Furniture

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

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

Diversification Opportunities for Pembina Pipeline and Bassett Furniture

0.09

Correlation Coefficient

Pembina Pipeline  Bassett Furniture

Significant diversification

The 3 months correlation between Pembina and Bassett is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Pembina Pipeline 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 Pembina Pipeline 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 Pembina Pipeline i.e., Pembina Pipeline and Bassett Furniture go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Bassett Furniture

If you would invest  1,378  in Bassett Furniture Industries on October 26, 2024 and sell it today you would earn a total of  57.00  from holding Bassett Furniture Industries or generate 4.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Pembina Pipeline  vs.  Bassett Furniture Industries

Pembina Pipeline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pembina Pipeline has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pembina Pipeline is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Bassett Furniture

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bassett Furniture Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Bassett Furniture may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pembina Pipeline and Bassett Furniture

The main advantage of trading using opposite Pembina Pipeline and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline 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 Pembina Pipeline 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..