Correlation Between Target Hospitality and Bassett Furniture
Can any of the company-specific risk be diversified away by investing in both Target Hospitality 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 Target Hospitality and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Hospitality Corp and Bassett Furniture Industries, you can compare the effects of market volatilities on Target Hospitality 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 Target Hospitality with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Hospitality and Bassett Furniture.
Diversification Opportunities for Target Hospitality and Bassett Furniture
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Target and Bassett is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Target Hospitality Corp and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Target Hospitality 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 Target Hospitality Corp 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 Target Hospitality i.e., Target Hospitality and Bassett Furniture go up and down completely randomly.
Pair Corralation between Target Hospitality and Bassett Furniture
Allowing for the 90-day total investment horizon Target Hospitality Corp is expected to generate 1.91 times more return on investment than Bassett Furniture. However, Target Hospitality is 1.91 times more volatile than Bassett Furniture Industries. It trades about 0.1 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about -0.03 per unit of risk. If you would invest 867.00 in Target Hospitality Corp on March 13, 2024 and sell it today you would earn a total of 183.00 from holding Target Hospitality Corp or generate 21.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.41% |
Values | Daily Returns |
Target Hospitality Corp vs. Bassett Furniture Industries
Performance |
Timeline |
Target Hospitality Corp |
Bassett Furniture |
Target Hospitality and Bassett Furniture Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Target Hospitality and Bassett Furniture
The main advantage of trading using opposite Target Hospitality and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Hospitality 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.Target Hospitality vs. OneSpaWorld Holdings | Target Hospitality vs. KLX Energy Services | Target Hospitality vs. International Money Express | Target Hospitality vs. Concrete Pumping Holdings |
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Check out your portfolio center.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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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