Correlation Between Abrdn Property and Bath Body

Can any of the company-specific risk be diversified away by investing in both Abrdn Property 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 Abrdn Property and Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between abrdn Property Income and Bath Body Works, you can compare the effects of market volatilities on Abrdn Property 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 Abrdn Property with a short position of Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Property and Bath Body.

Diversification Opportunities for Abrdn Property and Bath Body

0.83

Correlation Coefficient

Abrdn Property  Bath Body

Very poor diversification

The 3 months correlation between Abrdn and Bath is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Property Income 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 Abrdn Property 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 abrdn Property Income 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 Abrdn Property i.e., Abrdn Property and Bath Body go up and down completely randomly.

Pair Corralation between Abrdn Property and Bath Body

Assuming the 90 days trading horizon abrdn Property Income is expected to generate 22.16 times more return on investment than Bath Body. However, Abrdn Property is 22.16 times more volatile than Bath Body Works. It trades about 0.06 of its potential returns per unit of risk. Bath Body Works is currently generating about 0.01 per unit of risk. If you would invest  374.00  in abrdn Property Income on October 5, 2024 and sell it today you would earn a total of  306.00  from holding abrdn Property Income or generate 81.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.26%
Values	Daily Returns

abrdn Property Income  vs.  Bath Body Works

abrdn Property Income

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Property Income are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Abrdn Property exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bath Body Works

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bath Body Works are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bath Body unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abrdn Property and Bath Body

The main advantage of trading using opposite Abrdn Property and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abrdn Property 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.

The idea behind abrdn Property Income and Bath Body Works pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.