Correlation Between CAP LEASE and Bath Body
Can any of the company-specific risk be diversified away by investing in both CAP LEASE 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 CAP LEASE and Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAP LEASE AVIATION and Bath Body Works, you can compare the effects of market volatilities on CAP LEASE 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 CAP LEASE with a short position of Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP LEASE and Bath Body.
Diversification Opportunities for CAP LEASE and Bath Body
Excellent diversification
The 3 months correlation between CAP and Bath is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION 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 CAP LEASE 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 CAP LEASE AVIATION 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 CAP LEASE i.e., CAP LEASE and Bath Body go up and down completely randomly.
Pair Corralation between CAP LEASE and Bath Body
Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the Bath Body. But the stock apears to be less risky and, when comparing its historical volatility, CAP LEASE AVIATION is 1.37 times less risky than Bath Body. The stock trades about -0.07 of its potential returns per unit of risk. The Bath Body Works is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,996 in Bath Body Works on September 24, 2024 and sell it today you would lose (54.00) from holding Bath Body Works or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAP LEASE AVIATION vs. Bath Body Works
Performance |
| Timeline |
| CAP LEASE AVIATION |
| Bath Body Works |
CAP LEASE and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAP LEASE and Bath Body
The main advantage of trading using opposite CAP LEASE and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE 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.| CAP LEASE vs. Givaudan SA | CAP LEASE vs. Antofagasta PLC | CAP LEASE vs. Ferrexpo PLC | CAP LEASE vs. Atalaya Mining |
| Bath Body vs. Uniper SE | Bath Body vs. Mulberry Group PLC | Bath Body vs. London Security Plc | Bath Body vs. Triad Group PLC |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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