Correlation Between Morgan Advanced and Bath Body
Can any of the company-specific risk be diversified away by investing in both Morgan Advanced 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 Morgan Advanced and Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Advanced Materials and Bath Body Works, you can compare the effects of market volatilities on Morgan Advanced 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 Morgan Advanced with a short position of Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Advanced and Bath Body.
Diversification Opportunities for Morgan Advanced and Bath Body
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Morgan and Bath is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced 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 Morgan Advanced 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 Morgan Advanced 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 Morgan Advanced i.e., Morgan Advanced and Bath Body go up and down completely randomly.
Pair Corralation between Morgan Advanced and Bath Body
Assuming the 90 days trading horizon Morgan Advanced Materials is expected to under-perform the Bath Body. In addition to that, Morgan Advanced is 1.49 times more volatile than Bath Body Works. It trades about -0.03 of its total potential returns per unit of risk. Bath Body Works is currently generating about 0.12 per unit of volatility. If you would invest 3,664 in Bath Body Works on November 7, 2024 and sell it today you would earn a total of 133.00 from holding Bath Body Works or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Morgan Advanced Materials vs. Bath Body Works
Performance |
| Timeline |
| Morgan Advanced Materials |
| Bath Body Works |
Morgan Advanced and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Advanced and Bath Body
The main advantage of trading using opposite Morgan Advanced and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Advanced 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.| Morgan Advanced vs. Infrastrutture Wireless Italiane | Morgan Advanced vs. Ecclesiastical Insurance Office | Morgan Advanced vs. Geely Automobile Holdings | Morgan Advanced vs. Wyndham Hotels Resorts |
| Bath Body vs. McEwen Mining | Bath Body vs. GoldMining | Bath Body vs. National Beverage Corp | Bath Body vs. Molson Coors Beverage |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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