Correlation Between Bassett Furniture and Casper Sleep

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

Diversification Opportunities for Bassett Furniture and Casper Sleep

0.0

Correlation Coefficient

Bassett Furniture  Casper Sleep

Pay attention - limited upside

The 3 months correlation between Bassett and Casper is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Casper Sleep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casper Sleep 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 Casper Sleep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casper Sleep has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Casper Sleep go up and down completely randomly.

Pair Corralation between Bassett Furniture and Casper Sleep

If you would invest (100.00) in Casper Sleep on January 24, 2024 and sell it today you would earn a total of  100.00  from holding Casper Sleep or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bassett Furniture Industries  vs.  Casper Sleep

Bassett Furniture

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Casper Sleep

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Casper Sleep has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Casper Sleep is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bassett Furniture and Casper Sleep

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

The idea behind Bassett Furniture Industries and Casper Sleep 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.