Correlation Between Bassett Furniture and Monolithic Power
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and Monolithic Power 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 Monolithic Power 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 Monolithic Power Systems, you can compare the effects of market volatilities on Bassett Furniture and Monolithic Power 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 Monolithic Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Monolithic Power.
Diversification Opportunities for Bassett Furniture and Monolithic Power
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bassett and Monolithic is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Monolithic Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monolithic Power Systems 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 Monolithic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monolithic Power Systems has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Monolithic Power go up and down completely randomly.
Pair Corralation between Bassett Furniture and Monolithic Power
Given the investment horizon of 90 days Bassett Furniture Industries is expected to under-perform the Monolithic Power. But the stock apears to be less risky and, when comparing its historical volatility, Bassett Furniture Industries is 1.37 times less risky than Monolithic Power. The stock trades about -0.05 of its potential returns per unit of risk. The Monolithic Power Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 85,636 in Monolithic Power Systems on September 9, 2025 and sell it today you would earn a total of 12,722 from holding Monolithic Power Systems or generate 14.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Monolithic Power Systems
Performance |
| Timeline |
| Bassett Furniture |
| Monolithic Power Systems |
Bassett Furniture and Monolithic Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Monolithic Power
The main advantage of trading using opposite Bassett Furniture and Monolithic Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, Monolithic Power 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 Monolithic Power will offset losses from the drop in Monolithic Power's long position.| Bassett Furniture vs. Kewaunee Scientific | Bassett Furniture vs. Traeger | Bassett Furniture vs. Virco Manufacturing | Bassett Furniture vs. Sleep Number Corp |
| Monolithic Power vs. NXP Semiconductors NV | Monolithic Power vs. ASE Industrial Holding | Monolithic Power vs. Block, Inc | Monolithic Power vs. Western Digital |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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