Correlation Between Patria Investments and Bath Body
Can any of the company-specific risk be diversified away by investing in both Patria Investments 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 Patria Investments and Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patria Investments Limited and Bath Body Works, you can compare the effects of market volatilities on Patria Investments 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 Patria Investments with a short position of Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patria Investments and Bath Body.
Diversification Opportunities for Patria Investments and Bath Body
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Patria and Bath is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Patria Investments Limited 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 Patria Investments 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 Patria Investments Limited 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 Patria Investments i.e., Patria Investments and Bath Body go up and down completely randomly.
Pair Corralation between Patria Investments and Bath Body
Assuming the 90 days trading horizon Patria Investments Limited is expected to generate 4.14 times more return on investment than Bath Body. However, Patria Investments is 4.14 times more volatile than Bath Body Works. It trades about -0.07 of its potential returns per unit of risk. Bath Body Works is currently generating about -0.4 per unit of risk. If you would invest 3,588 in Patria Investments Limited on November 4, 2024 and sell it today you would lose (134.00) from holding Patria Investments Limited or give up 3.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Patria Investments Limited vs. Bath Body Works
Performance |
| Timeline |
| Patria Investments |
| Bath Body Works |
Patria Investments and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patria Investments and Bath Body
The main advantage of trading using opposite Patria Investments and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patria Investments 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.| Patria Investments vs. SK Telecom Co, | Patria Investments vs. Unifique Telecomunicaes SA | Patria Investments vs. Air Products and | Patria Investments vs. Academy Sports and |
| Bath Body vs. Applied Materials, | Bath Body vs. Brpr Corporate Offices | Bath Body vs. Global X Funds | Bath Body vs. Autohome |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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