Correlation Between Basic Materials and Bath Body
Can any of the company-specific risk be diversified away by investing in both Basic Materials 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 Basic Materials and Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and Bath Body Works, you can compare the effects of market volatilities on Basic Materials 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 Basic Materials with a short position of Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Bath Body.
Diversification Opportunities for Basic Materials and Bath Body
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Basic and Bath is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials 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 Basic Materials 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 Basic Materials 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 Basic Materials i.e., Basic Materials and Bath Body go up and down completely randomly.
Pair Corralation between Basic Materials and Bath Body
Assuming the 90 days trading horizon Basic Materials is expected to under-perform the Bath Body. But the index apears to be less risky and, when comparing its historical volatility, Basic Materials is 3.36 times less risky than Bath Body. The index trades about 0.0 of its potential returns per unit of risk. The Bath Body Works is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,802 in Bath Body Works on September 14, 2024 and sell it today you would earn a total of 97.00 from holding Bath Body Works or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 61.45% |
| Values | Daily Returns |
Basic Materials vs. Bath Body Works
Performance |
| Timeline |
Basic Materials and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
Bath Body Works
Pair trading matchups for Bath Body
Pair Trading with Basic Materials and Bath Body
The main advantage of trading using opposite Basic Materials and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials 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.| Basic Materials vs. Beyond Meat | Basic Materials vs. Verizon Communications | Basic Materials vs. STMicroelectronics NV | Basic Materials vs. Arrow Electronics, |
| Bath Body vs. Mliuz SA | Bath Body vs. Natura Co Holding | Bath Body vs. Rede DOr So | Bath Body vs. Locaweb Servios de |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Global Correlations Find global opportunities by holding instruments from different markets |