Correlation Between Bassett Furniture and Zumiez

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

Diversification Opportunities for Bassett Furniture and Zumiez

0.44

Correlation Coefficient

Bassett Furniture  Zumiez

Very weak diversification

The 3 months correlation between Bassett and Zumiez is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc 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 Zumiez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zumiez Inc has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Zumiez go up and down completely randomly.

Pair Corralation between Bassett Furniture and Zumiez

Given the investment horizon of 90 days Bassett Furniture Industries is expected to under-perform the Zumiez. But the stock apears to be less risky and, when comparing its historical volatility, Bassett Furniture Industries is 1.23 times less risky than Zumiez. The stock trades about -0.02 of its potential returns per unit of risk. The Zumiez Inc is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  1,416  in Zumiez Inc on February 4, 2024 and sell it today you would earn a total of  302.00  from holding Zumiez Inc or generate 21.33% return on investment over 90 days.

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

Bassett Furniture Industries  vs.  Zumiez Inc

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 latest unsteady 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.

Zumiez Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zumiez Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Zumiez is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bassett Furniture and Zumiez

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

The idea behind Bassett Furniture Industries and Zumiez Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.