Correlation Between Diversified Energy and Bath Body
Can any of the company-specific risk be diversified away by investing in both Diversified Energy 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 Diversified Energy and Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Energy and Bath Body Works, you can compare the effects of market volatilities on Diversified Energy 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 Diversified Energy with a short position of Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Energy and Bath Body.
Diversification Opportunities for Diversified Energy and Bath Body
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diversified and Bath is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Energy 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 Diversified Energy 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 Diversified Energy 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 Diversified Energy i.e., Diversified Energy and Bath Body go up and down completely randomly.
Pair Corralation between Diversified Energy and Bath Body
Assuming the 90 days trading horizon Diversified Energy is expected to under-perform the Bath Body. In addition to that, Diversified Energy is 1.04 times more volatile than Bath Body Works. It trades about -0.06 of its total potential returns per unit of risk. Bath Body Works is currently generating about 0.17 per unit of volatility. If you would invest 3,590 in Bath Body Works on September 24, 2024 and sell it today you would earn a total of 352.00 from holding Bath Body Works or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Energy vs. Bath Body Works
Performance |
| Timeline |
| Diversified Energy |
| Bath Body Works |
Diversified Energy and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Energy and Bath Body
The main advantage of trading using opposite Diversified Energy and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Energy 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.| Diversified Energy vs. Zoom Video Communications | Diversified Energy vs. Enbridge | Diversified Energy vs. Endo International PLC | Diversified Energy vs. XLMedia PLC |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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