Correlation Between Amazon and Bath Body
Can any of the company-specific risk be diversified away by investing in both Amazon and Bath Body 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 Amazon and Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Bath Body Works, you can compare the effects of market volatilities on Amazon and Bath Body 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 Amazon with a short position of Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Bath Body.
Diversification Opportunities for Amazon and Bath Body
Very poor diversification
The 3 months correlation between Amazon and Bath is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Bath Body Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bath Body Works and Amazon 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 Amazon Inc are associated (or correlated) with Bath Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bath Body Works has no effect on the direction of Amazon i.e., Amazon and Bath Body go up and down completely randomly.
Pair Corralation between Amazon and Bath Body
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.5 times more return on investment than Bath Body. However, Amazon Inc is 2.0 times less risky than Bath Body. It trades about -0.15 of its potential returns per unit of risk. Bath Body Works is currently generating about -0.12 per unit of risk. If you would invest 23,000 in Amazon Inc on October 12, 2024 and sell it today you would lose (750.00) from holding Amazon Inc or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.48% |
| Values | Daily Returns |
Amazon Inc vs. Bath Body Works
Performance |
| Timeline |
| Amazon Inc |
| Bath Body Works |
Amazon and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Bath Body
The main advantage of trading using opposite Amazon and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Bath Body 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 Bath Body will offset losses from the drop in Bath Body's long position.| Amazon vs. Deltex Medical Group | Amazon vs. Cognizant Technology Solutions | Amazon vs. Cizzle Biotechnology Holdings | Amazon vs. JLEN Environmental Assets |
| Bath Body vs. Smithson Investment Trust | Bath Body vs. Tavistock Investments Plc | Bath Body vs. Primorus Investments plc | Bath Body vs. Foresight Environmental Infrastructure |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Transaction History View history of all your transactions and understand their impact on performance |