Correlation Between Traeger and Bassett Furniture

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Can any of the company-specific risk be diversified away by investing in both Traeger 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 Traeger and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Traeger and Bassett Furniture Industries, you can compare the effects of market volatilities on Traeger 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 Traeger with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Traeger and Bassett Furniture.

Diversification Opportunities for Traeger and Bassett Furniture

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Traeger and Bassett is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Traeger and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Traeger 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 Traeger 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 Traeger i.e., Traeger and Bassett Furniture go up and down completely randomly.

Pair Corralation between Traeger and Bassett Furniture

Given the investment horizon of 90 days Traeger is expected to generate 4.6 times more return on investment than Bassett Furniture. However, Traeger is 4.6 times more volatile than Bassett Furniture Industries. It trades about 0.13 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about -0.18 per unit of risk. If you would invest  221.00  in Traeger on December 29, 2023 and sell it today you would earn a total of  31.00  from holding Traeger or generate 14.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Traeger  vs.  Bassett Furniture Industries

 Performance 
       Timeline  
Traeger 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Traeger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Traeger is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
Bassett Furniture 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Traeger and Bassett Furniture Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Traeger and Bassett Furniture

The main advantage of trading using opposite Traeger and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Traeger 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 Traeger 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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