Correlation Between 26875PAU5 and Bassett Furniture

Can any of the company-specific risk be diversified away by investing in both 26875PAU5 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 26875PAU5 and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EOG RESOURCES INC and Bassett Furniture Industries, you can compare the effects of market volatilities on 26875PAU5 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 26875PAU5 with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26875PAU5 and Bassett Furniture.

Diversification Opportunities for 26875PAU5 and Bassett Furniture

-0.09

Correlation Coefficient

26875PAU5  Bassett Furniture

Good diversification

The 3 months correlation between 26875PAU5 and Bassett is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding EOG RESOURCES INC and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and 26875PAU5 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 EOG RESOURCES INC 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 26875PAU5 i.e., 26875PAU5 and Bassett Furniture go up and down completely randomly.

Pair Corralation between 26875PAU5 and Bassett Furniture

Assuming the 90 days trading horizon 26875PAU5 is expected to generate 16.29 times less return on investment than Bassett Furniture. But when comparing it to its historical volatility, EOG RESOURCES INC is 5.34 times less risky than Bassett Furniture. It trades about 0.01 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,341  in Bassett Furniture Industries on September 27, 2024 and sell it today you would earn a total of  37.00  from holding Bassett Furniture Industries or generate 2.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

EOG RESOURCES INC  vs.  Bassett Furniture Industries

EOG RESOURCES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOG RESOURCES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26875PAU5 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with 26875PAU5 and Bassett Furniture

The main advantage of trading using opposite 26875PAU5 and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26875PAU5 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 EOG RESOURCES INC 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 Commodity Directory module to find actively traded commodities issued by global exchanges.