Correlation Between Bath Body and Indigo Books
Can any of the company-specific risk be diversified away by investing in both Bath Body and Indigo Books 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 Indigo Books 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 Indigo Books Music, you can compare the effects of market volatilities on Bath Body and Indigo Books 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 Indigo Books. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bath Body and Indigo Books.
Diversification Opportunities for Bath Body and Indigo Books
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bath and Indigo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bath Body Works and Indigo Books Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indigo Books Music 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 Indigo Books. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indigo Books Music has no effect on the direction of Bath Body i.e., Bath Body and Indigo Books go up and down completely randomly.
Pair Corralation between Bath Body and Indigo Books
If you would invest 2,873 in Bath Body Works on September 2, 2024 and sell it today you would earn a total of 751.00 from holding Bath Body Works or generate 26.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Bath Body Works vs. Indigo Books Music
Performance |
| Timeline |
| Bath Body Works |
| Indigo Books Music |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bath Body and Indigo Books Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bath Body and Indigo Books
The main advantage of trading using opposite Bath Body and Indigo Books positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bath Body position performs unexpectedly, Indigo Books 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 Indigo Books will offset losses from the drop in Indigo Books' long position.| Bath Body vs. Sportsmans | Bath Body vs. Big 5 Sporting | Bath Body vs. Williams Sonoma | Bath Body vs. Dicks Sporting Goods |
| Indigo Books vs. National Vision Holdings | Indigo Books vs. Naas Technology ADR | Indigo Books vs. Sportsmans | Indigo Books vs. Bath Body Works |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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