Correlation Between Energy Focu and Bassett Furniture
Can any of the company-specific risk be diversified away by investing in both Energy Focu 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 Energy Focu and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Focu and Bassett Furniture Industries, you can compare the effects of market volatilities on Energy Focu 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 Energy Focu with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Focu and Bassett Furniture.
Diversification Opportunities for Energy Focu and Bassett Furniture
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Energy and Bassett is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Energy Focu and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Energy Focu 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 Energy Focu 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 Energy Focu i.e., Energy Focu and Bassett Furniture go up and down completely randomly.
Pair Corralation between Energy Focu and Bassett Furniture
Given the investment horizon of 90 days Energy Focu is expected to generate 2.87 times more return on investment than Bassett Furniture. However, Energy Focu is 2.87 times more volatile than Bassett Furniture Industries. It trades about -0.06 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about -0.37 per unit of risk. If you would invest 161.00 in Energy Focu on January 26, 2024 and sell it today you would lose (9.51) from holding Energy Focu or give up 5.91% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Energy Focu vs. Bassett Furniture Industries
Performance |
Timeline |
Energy Focu |
Bassett Furniture |
Energy Focu and Bassett Furniture Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Energy Focu and Bassett Furniture
The main advantage of trading using opposite Energy Focu and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Focu 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.Energy Focu vs. Petros Pharmaceuticals | Energy Focu vs. Pioneer Power Solutions | Energy Focu vs. Ensysce Biosciences | Energy Focu vs. ShiftPixy |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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