Correlation Between Bath Body and Leslies
Can any of the company-specific risk be diversified away by investing in both Bath Body and Leslies 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 Leslies 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 Leslies, you can compare the effects of market volatilities on Bath Body and Leslies 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 Leslies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bath Body and Leslies.
Diversification Opportunities for Bath Body and Leslies
Significant diversification
The 3 months correlation between Bath and Leslies is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bath Body Works and Leslies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leslies 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 Leslies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leslies has no effect on the direction of Bath Body i.e., Bath Body and Leslies go up and down completely randomly.
Pair Corralation between Bath Body and Leslies
Given the investment horizon of 90 days Bath Body Works is expected to generate 0.53 times more return on investment than Leslies. However, Bath Body Works is 1.9 times less risky than Leslies. It trades about -0.01 of its potential returns per unit of risk. Leslies is currently generating about -0.03 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bath Body Works vs. Leslies
Performance |
| Timeline |
| Bath Body Works |
| Leslies |
Bath Body and Leslies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bath Body and Leslies
The main advantage of trading using opposite Bath Body and Leslies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bath Body position performs unexpectedly, Leslies 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 Leslies will offset losses from the drop in Leslies' long position.| Bath Body vs. Sportsmans | Bath Body vs. Big 5 Sporting | Bath Body vs. Williams Sonoma | Bath Body vs. Dicks Sporting Goods |
| Leslies vs. Sally Beauty Holdings | Leslies vs. ODP Corp | Leslies vs. 1 800 FLOWERSCOM | Leslies vs. Caseys General Stores |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |