Correlation Between Bassett Furniture and Summa Silver

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

Diversification Opportunities for Bassett Furniture and Summa Silver

-0.38

Correlation Coefficient

Bassett Furniture  Summa Silver

Very good diversification

The 3 months correlation between Bassett and Summa is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp 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 Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Summa Silver go up and down completely randomly.

Pair Corralation between Bassett Furniture and Summa Silver

Given the investment horizon of 90 days Bassett Furniture Industries is expected to under-perform the Summa Silver. But the stock apears to be less risky and, when comparing its historical volatility, Bassett Furniture Industries is 2.22 times less risky than Summa Silver. The stock trades about -0.18 of its potential returns per unit of risk. The Summa Silver Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Summa Silver Corp on September 27, 2024 and sell it today you would lose (1.00) from holding Summa Silver Corp or give up 4.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bassett Furniture Industries  vs.  Summa Silver Corp

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 comparatively stable technical and fundamental indicators, Bassett Furniture is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bassett Furniture and Summa Silver

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

The idea behind Bassett Furniture Industries and Summa Silver Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.