Correlation Between Envela Corp and Bed Bath

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Can any of the company-specific risk be diversified away by investing in both Envela Corp and Bed Bath 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 Envela Corp and Bed Bath into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Envela Corp and Bed Bath Beyond, you can compare the effects of market volatilities on Envela Corp and Bed Bath 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 Envela Corp with a short position of Bed Bath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Envela Corp and Bed Bath.

Diversification Opportunities for Envela Corp and Bed Bath

-0.73
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Envela Corp and Bed Bath

Considering the 90-day investment horizon Envela Corp is expected to generate 21.18 times less return on investment than Bed Bath. But when comparing it to its historical volatility, Envela Corp is 2.68 times less risky than Bed Bath. It trades about 0.05 of its potential returns per unit of risk. Bed Bath Beyond is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  480.00  in Bed Bath Beyond on May 11, 2022 and sell it today you would earn a total of  661.00  from holding Bed Bath Beyond or generate 137.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Envela Corp  vs.  Bed Bath Beyond

 Performance (%) 
       Timeline  
Envela Corp 
Envela Performance
16 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Envela Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting essential indicators, Envela Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Envela Price Channel

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

Envela Corp and Bed Bath Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Envela Corp and Bed Bath

The main advantage of trading using opposite Envela Corp and Bed Bath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Envela Corp position performs unexpectedly, Bed Bath 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 Bed Bath will offset losses from the drop in Bed Bath's long position.
The idea behind Envela Corp and Bed Bath Beyond 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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