Correlation Between Bath Body and AutoZone,

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

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

Diversification Opportunities for Bath Body and AutoZone,

0.95

Correlation Coefficient

Bath Body  AutoZone,

Almost no diversification

The 3 months correlation between Bath and AutoZone, is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bath Body Works and AutoZone, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone, and Bath Body 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 Bath Body Works are associated (or correlated) with AutoZone,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone, has no effect on the direction of Bath Body i.e., Bath Body and AutoZone, go up and down completely randomly.

Pair Corralation between Bath Body and AutoZone,

Assuming the 90 days trading horizon Bath Body Works is expected to generate 1.86 times more return on investment than AutoZone,. However, Bath Body is 1.86 times more volatile than AutoZone,. It trades about 0.19 of its potential returns per unit of risk. AutoZone, is currently generating about 0.08 per unit of risk. If you would invest  4,266  in Bath Body Works on October 23, 2024 and sell it today you would earn a total of  1,370  from holding Bath Body Works or generate 32.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Bath Body Works  vs.  AutoZone,

Bath Body Works

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bath Body Works are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Bath Body sustained solid returns over the last few months and may actually be approaching a breakup point.

AutoZone,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AutoZone, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bath Body and AutoZone,

The main advantage of trading using opposite Bath Body and AutoZone, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bath Body position performs unexpectedly, AutoZone, 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 AutoZone, will offset losses from the drop in AutoZone,'s long position.

The idea behind Bath Body Works and AutoZone, 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.