Correlation Between Bed Bath and Best Buy

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

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

Diversification Opportunities for Bed Bath and Best Buy

0.0

Correlation Coefficient

Bed Bath  Best Buy

Pay attention - limited upside

The 3 months correlation between Bed and Best is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bed Bath Beyond and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Bed Bath 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 Bed Bath Beyond are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Bed Bath i.e., Bed Bath and Best Buy go up and down completely randomly.

Pair Corralation between Bed Bath and Best Buy

If you would invest (100.00) in Bed Bath Beyond on October 10, 2024 and sell it today you would earn a total of  100.00  from holding Bed Bath Beyond or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bed Bath Beyond  vs.  Best Buy Co

Bed Bath Beyond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bed Bath Beyond has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Bed Bath is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Best Buy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Best Buy Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bed Bath and Best Buy

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

The idea behind Bed Bath Beyond and Best Buy Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.