Correlation Between Bath Body and Dicks Sporting
Can any of the company-specific risk be diversified away by investing in both Bath Body and Dicks Sporting 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 Bath Body and Dicks Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bath Body Works and Dicks Sporting Goods, you can compare the effects of market volatilities on Bath Body and Dicks Sporting 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 Bath Body with a short position of Dicks Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bath Body and Dicks Sporting.
Diversification Opportunities for Bath Body and Dicks Sporting
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bath and Dicks is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bath Body Works and Dicks Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicks Sporting Goods and Bath Body 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 Bath Body Works are associated (or correlated) with Dicks Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicks Sporting Goods has no effect on the direction of Bath Body i.e., Bath Body and Dicks Sporting go up and down completely randomly.
Pair Corralation between Bath Body and Dicks Sporting
Given the investment horizon of 90 days Bath Body Works is expected to generate 1.49 times more return on investment than Dicks Sporting. However, Bath Body is 1.49 times more volatile than Dicks Sporting Goods. It trades about 0.08 of its potential returns per unit of risk. Dicks Sporting Goods is currently generating about 0.06 per unit of risk. If you would invest 2,947 in Bath Body Works on August 24, 2024 and sell it today you would earn a total of 124.00 from holding Bath Body Works or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bath Body Works vs. Dicks Sporting Goods
Performance |
| Timeline |
| Bath Body Works |
| Dicks Sporting Goods |
Bath Body and Dicks Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bath Body and Dicks Sporting
The main advantage of trading using opposite Bath Body and Dicks Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bath Body position performs unexpectedly, Dicks Sporting 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 Dicks Sporting will offset losses from the drop in Dicks Sporting's long position.| Bath Body vs. Sportsmans | Bath Body vs. Big 5 Sporting | Bath Body vs. Williams Sonoma | Bath Body vs. Dicks Sporting Goods |
| Dicks Sporting vs. RH | Dicks Sporting vs. AutoZone | Dicks Sporting vs. Best Buy Co | Dicks Sporting vs. Ulta Beauty |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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