Correlation Between Wheaton Precious and Bath Body

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

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

Diversification Opportunities for Wheaton Precious and Bath Body

-0.31

Correlation Coefficient

Wheaton Precious  Bath Body

Very good diversification

The 3 months correlation between Wheaton and Bath is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals 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 Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and Bath Body go up and down completely randomly.

Pair Corralation between Wheaton Precious and Bath Body

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to under-perform the Bath Body. But the stock apears to be less risky and, when comparing its historical volatility, Wheaton Precious Metals is 1.16 times less risky than Bath Body. The stock trades about -0.16 of its potential returns per unit of risk. The Bath Body Works is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,768  in Bath Body Works on October 5, 2024 and sell it today you would earn a total of  7.00  from holding Bath Body Works or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Wheaton Precious Metals  vs.  Bath Body Works

Wheaton Precious Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Wheaton Precious is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Wheaton Precious and Bath Body

The main advantage of trading using opposite Wheaton Precious and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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 Wheaton Precious Metals 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.