Correlation Between Bed Bath and Apple

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

Diversification Opportunities for Bed Bath and Apple

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bed Bath and Apple is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bed Bath Beyond and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Bed Bath i.e., Bed Bath and Apple go up and down completely randomly.

Pair Corralation between Bed Bath and Apple

Given the investment horizon of 90 days Bed Bath Beyond is expected to under-perform the Apple. In addition to that, Bed Bath is 4.58 times more volatile than Apple Inc. It trades about -0.01 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.03 per unit of volatility. If you would invest  12,538  in Apple Inc on July 9, 2022 and sell it today you would earn a total of  1,489  from holding Apple Inc or generate 11.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bed Bath Beyond  vs.  Apple Inc

 Performance (%) 
       Timeline  
Bed Bath Beyond 
Bed Bath Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bed Bath Beyond are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Bed Bath showed solid returns over the last few months and may actually be approaching a breakup point.

Bed Bath Price Channel

Apple Inc 
Apple Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Apple is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Apple Price Channel

Bed Bath and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bed Bath and Apple

The main advantage of trading using opposite Bed Bath and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bed Bath position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
Bed Bath vs. Best Buy Company
The idea behind Bed Bath Beyond and Apple 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.
Apple vs. Amazon Inc
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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