Correlation Between Bed Bath and Genuine Parts

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

Diversification Opportunities for Bed Bath and Genuine Parts

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Bed Bath and Genuine is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bed Bath Beyond and Genuine Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Bed Bath i.e., Bed Bath and Genuine Parts go up and down completely randomly.

Pair Corralation between Bed Bath and Genuine Parts

Given the investment horizon of 90 days Bed Bath Beyond is expected to under-perform the Genuine Parts. In addition to that, Bed Bath is 4.12 times more volatile than Genuine Parts. It trades about -0.34 of its total potential returns per unit of risk. Genuine Parts is currently generating about -0.02 per unit of volatility. If you would invest  13,493  in Genuine Parts on April 2, 2022 and sell it today you would lose (158.00)  from holding Genuine Parts or give up 1.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bed Bath Beyond  vs.  Genuine Parts

 Performance (%) 
      Timeline 
Bed Bath Beyond 
Bed Bath Performance
0 of 100
Over the last 90 days Bed Bath Beyond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Bed Bath Price Channel

Genuine Parts 
Genuine Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Genuine Parts is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0268
Payout Ratio
0.47
Last Split Factor
3:2
Forward Annual Dividend Rate
3.58
Dividend Date
2022-07-01
Ex Dividend Date
2022-06-02
Last Split Date
1997-04-15

Genuine Price Channel

Bed Bath and Genuine Parts Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Bed Bath and Genuine Parts

The main advantage of trading using opposite Bed Bath and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bed Bath position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' long position.
The idea behind Bed Bath Beyond and Genuine Parts 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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