Correlation Between EVgo Equity and Sally Beauty

Can any of the company-specific risk be diversified away by investing in both EVgo Equity and Sally Beauty 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 EVgo Equity and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EVgo Equity Warrants and Sally Beauty Holdings, you can compare the effects of market volatilities on EVgo Equity and Sally Beauty 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 EVgo Equity with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVgo Equity and Sally Beauty.

Diversification Opportunities for EVgo Equity and Sally Beauty

-0.08

Correlation Coefficient

EVgo Equity  Sally Beauty

Good diversification

The 3 months correlation between EVgo and Sally is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding EVgo Equity Warrants and Sally Beauty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sally Beauty Holdings and EVgo Equity 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 EVgo Equity Warrants are associated (or correlated) with Sally Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sally Beauty Holdings has no effect on the direction of EVgo Equity i.e., EVgo Equity and Sally Beauty go up and down completely randomly.

Pair Corralation between EVgo Equity and Sally Beauty

Assuming the 90 days horizon EVgo Equity Warrants is expected to under-perform the Sally Beauty. In addition to that, EVgo Equity is 3.99 times more volatile than Sally Beauty Holdings. It trades about -0.23 of its total potential returns per unit of risk. Sally Beauty Holdings is currently generating about -0.59 per unit of volatility. If you would invest  1,422  in Sally Beauty Holdings on September 27, 2024 and sell it today you would lose (304.00) from holding Sally Beauty Holdings or give up 21.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EVgo Equity Warrants  vs.  Sally Beauty Holdings

EVgo Equity Warrants

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVgo Equity Warrants are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EVgo Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Sally Beauty Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sally Beauty Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with EVgo Equity and Sally Beauty

The main advantage of trading using opposite EVgo Equity and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVgo Equity position performs unexpectedly, Sally Beauty 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 Sally Beauty will offset losses from the drop in Sally Beauty's long position.

The idea behind EVgo Equity Warrants and Sally Beauty Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.