Correlation Between Leslies and Bath Body
Can any of the company-specific risk be diversified away by investing in both Leslies 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 Leslies and Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leslies and Bath Body Works, you can compare the effects of market volatilities on Leslies 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 Leslies with a short position of Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leslies and Bath Body.
Diversification Opportunities for Leslies and Bath Body
Poor diversification
The 3 months correlation between Leslies and Bath is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Leslies 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 Leslies 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 Leslies 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 Leslies i.e., Leslies and Bath Body go up and down completely randomly.
Pair Corralation between Leslies and Bath Body
Given the investment horizon of 90 days Leslies is expected to under-perform the Bath Body. In addition to that, Leslies is 1.88 times more volatile than Bath Body Works. It trades about -0.08 of its total potential returns per unit of risk. Bath Body Works is currently generating about 0.0 per unit of volatility. If you would invest 3,323 in Bath Body Works on January 14, 2025 and sell it today you would lose (554.00) from holding Bath Body Works or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leslies vs. Bath Body Works
Performance |
| Timeline |
| Leslies |
| Bath Body Works |
Leslies and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leslies and Bath Body
The main advantage of trading using opposite Leslies and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leslies 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.| Leslies vs. Sally Beauty Holdings | Leslies vs. ODP Corp | Leslies vs. 1 800 FLOWERSCOM | Leslies vs. Caseys General Stores |
| Bath Body vs. Sportsmans | Bath Body vs. Big 5 Sporting | Bath Body vs. Williams Sonoma | Bath Body vs. Dicks Sporting Goods |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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