Correlation Between Bed Bath and JJill

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Can any of the company-specific risk be diversified away by investing in both Bed Bath and JJill 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 JJill 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 JJill Inc, you can compare the effects of market volatilities on Bed Bath and JJill 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 JJill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bed Bath and JJill.

Diversification Opportunities for Bed Bath and JJill

 -0.55 Correlation Coefficient

Excellent diversification

The 3 months correlation between Bed Bath and JJill is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bed Bath Beyond and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc 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 JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Bed Bath i.e., Bed Bath and JJill go up and down completely randomly.

Pair Corralation between Bed Bath and JJill

Given the investment horizon of 90 days Bed Bath Beyond is expected to generate 9.43 times more return on investment than JJill. However, Bed Bath is 9.43 times more volatile than JJill Inc. It trades about 0.14 of its potential returns per unit of risk. JJill Inc is currently generating about 0.21 per unit of risk. If you would invest  231.00  in Bed Bath Beyond on November 4, 2022 and sell it today you would earn a total of  51.00  from holding Bed Bath Beyond or generate 22.08% return on investment over 90 days.
 Time Period 3 Months [change] Direction Moves Against Strength Very Weak Accuracy 100.0% Values Daily Returns

Bed Bath Beyond  vs.  JJill Inc

 Performance (%)
 Timeline
 Bed Bath Beyond Correlation Profile
Bed Bath Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bed Bath Beyond are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish fundamental drivers, Bed Bath showed solid returns over the last few months and may actually be approaching a breakup point.

Bed Bath Price Channel

 Performance Backtest Predict
 JJill Inc Correlation Profile
JJill Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, JJill revealed solid returns over the last few months and may actually be approaching a breakup point.

JJill Price Channel

 Performance Backtest Predict

Bed Bath and JJill Volatility Contrast

 Predicted Return Density
 Returns

Pair Trading with Bed Bath and JJill

The main advantage of trading using opposite Bed Bath and JJill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bed Bath position performs unexpectedly, JJill 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 JJill will offset losses from the drop in JJill's long position.
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The idea behind Bed Bath Beyond and JJill Inc 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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