Correlation Between European Wax and Safety Shot
Can any of the company-specific risk be diversified away by investing in both European Wax and Safety Shot 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 European Wax and Safety Shot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and Safety Shot, you can compare the effects of market volatilities on European Wax and Safety Shot 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 European Wax with a short position of Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Safety Shot.
Diversification Opportunities for European Wax and Safety Shot
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Safety is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot and European Wax 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 European Wax Center are associated (or correlated) with Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of European Wax i.e., European Wax and Safety Shot go up and down completely randomly.
Pair Corralation between European Wax and Safety Shot
Given the investment horizon of 90 days European Wax Center is expected to under-perform the Safety Shot. But the stock apears to be less risky and, when comparing its historical volatility, European Wax Center is 2.01 times less risky than Safety Shot. The stock trades about -0.46 of its potential returns per unit of risk. The Safety Shot is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Safety Shot on December 10, 2024 and sell it today you would earn a total of 1.00 from holding Safety Shot or generate 2.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
European Wax Center vs. Safety Shot
Performance |
Timeline |
European Wax Center |
Safety Shot |
European Wax and Safety Shot Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with European Wax and Safety Shot
The main advantage of trading using opposite European Wax and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot's long position.European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
Safety Shot vs. Webus International Limited | Safety Shot vs. Centessa Pharmaceuticals PLC | Safety Shot vs. Spyre Therapeutics | Safety Shot vs. FARO Technologies |
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 the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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