Correlation Between Software Circle and Bath Body
Can any of the company-specific risk be diversified away by investing in both Software Circle 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 Software Circle and Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Software Circle plc and Bath Body Works, you can compare the effects of market volatilities on Software Circle 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 Software Circle with a short position of Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Circle and Bath Body.
Diversification Opportunities for Software Circle and Bath Body
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Software and Bath is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Software Circle plc 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 Software Circle 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 Software Circle plc 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 Software Circle i.e., Software Circle and Bath Body go up and down completely randomly.
Pair Corralation between Software Circle and Bath Body
Assuming the 90 days trading horizon Software Circle plc is expected to generate 0.74 times more return on investment than Bath Body. However, Software Circle plc is 1.34 times less risky than Bath Body. It trades about 0.19 of its potential returns per unit of risk. Bath Body Works is currently generating about 0.12 per unit of risk. If you would invest 2,350 in Software Circle plc on November 6, 2024 and sell it today you would earn a total of 100.00 from holding Software Circle plc or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Software Circle plc vs. Bath Body Works
Performance |
| Timeline |
| Software Circle plc |
| Bath Body Works |
Software Circle and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Software Circle and Bath Body
The main advantage of trading using opposite Software Circle and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Circle 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.| Software Circle vs. Bytes Technology | Software Circle vs. Xeros Technology Group | Software Circle vs. Travel Leisure Co | Software Circle vs. Ecclesiastical Insurance Office |
| Bath Body vs. Pentair PLC | Bath Body vs. Fair Oaks Income | Bath Body vs. Amedeo Air Four | Bath Body vs. MTI Wireless Edge |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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