Correlation Between Bath Body and National Vision
Can any of the company-specific risk be diversified away by investing in both Bath Body and National Vision 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 National Vision 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 National Vision Holdings, you can compare the effects of market volatilities on Bath Body and National Vision 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 National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bath Body and National Vision.
Diversification Opportunities for Bath Body and National Vision
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bath and National is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bath Body Works and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings 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 National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of Bath Body i.e., Bath Body and National Vision go up and down completely randomly.
Pair Corralation between Bath Body and National Vision
Given the investment horizon of 90 days Bath Body Works is expected to generate 0.73 times more return on investment than National Vision. However, Bath Body Works is 1.37 times less risky than National Vision. It trades about -0.01 of its potential returns per unit of risk. National Vision Holdings is currently generating about -0.05 per unit of risk. If you would invest 4,226 in Bath Body Works on August 24, 2024 and sell it today you would lose (1,155) from holding Bath Body Works or give up 27.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bath Body Works vs. National Vision Holdings
Performance |
| Timeline |
| Bath Body Works |
| National Vision Holdings |
Bath Body and National Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bath Body and National Vision
The main advantage of trading using opposite Bath Body and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bath Body position performs unexpectedly, National Vision 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 National Vision will offset losses from the drop in National Vision's long position.| Bath Body vs. Sportsmans | Bath Body vs. Big 5 Sporting | Bath Body vs. Williams Sonoma | Bath Body vs. Dicks Sporting Goods |
| National Vision vs. Sally Beauty Holdings | National Vision vs. MarineMax | National Vision vs. Sportsmans | National Vision vs. 1 800 FLOWERSCOM |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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