Correlation Between RBACN and Bassett Furniture

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

By analyzing existing cross correlation between RBACN 775 15 MAR 31 and Bassett Furniture Industries, you can compare the effects of market volatilities on RBACN 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 RBACN with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBACN and Bassett Furniture.

Diversification Opportunities for RBACN and Bassett Furniture

0.42

Correlation Coefficient

RBACN  Bassett Furniture

Very weak diversification

The 3 months correlation between RBACN and Bassett is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding RBACN 775 15 MAR 31 and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and RBACN 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 RBACN 775 15 MAR 31 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 RBACN i.e., RBACN and Bassett Furniture go up and down completely randomly.

Pair Corralation between RBACN and Bassett Furniture

Assuming the 90 days trading horizon RBACN 775 15 MAR 31 is expected to generate 0.23 times more return on investment than Bassett Furniture. However, RBACN 775 15 MAR 31 is 4.35 times less risky than Bassett Furniture. It trades about 0.02 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about -0.01 per unit of risk. If you would invest  10,150  in RBACN 775 15 MAR 31 on October 15, 2024 and sell it today you would earn a total of  313.00  from holding RBACN 775 15 MAR 31 or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.09%
Values	Daily Returns

RBACN 775 15 MAR 31  vs.  Bassett Furniture Industries

RBACN 775 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBACN 775 15 MAR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RBACN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 RBACN and Bassett Furniture

The main advantage of trading using opposite RBACN and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBACN 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 RBACN 775 15 MAR 31 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.