Correlation Between Franchise and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both Franchise 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 Franchise and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franchise Group and Sally Beauty Holdings, you can compare the effects of market volatilities on Franchise 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 Franchise with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franchise and Sally Beauty.
Diversification Opportunities for Franchise and Sally Beauty
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franchise and Sally is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Franchise Group 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 Franchise 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 Franchise Group 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 Franchise i.e., Franchise and Sally Beauty go up and down completely randomly.
Pair Corralation between Franchise and Sally Beauty
Considering the 90-day investment horizon Franchise Group is expected to generate 0.81 times more return on investment than Sally Beauty. However, Franchise Group is 1.23 times less risky than Sally Beauty. It trades about 0.02 of its potential returns per unit of risk. Sally Beauty Holdings is currently generating about 0.0 per unit of risk. If you would invest 2,894 in Franchise Group on September 27, 2024 and sell it today you would earn a total of 76.00 from holding Franchise Group or generate 2.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 27.57% |
Values | Daily Returns |
Franchise Group vs. Sally Beauty Holdings
Performance |
Timeline |
Franchise Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sally Beauty Holdings |
Franchise and Sally Beauty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franchise and Sally Beauty
The main advantage of trading using opposite Franchise and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franchise 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.Franchise vs. Mega Uranium | Franchise vs. Laramide Resources | Franchise vs. NXG NextGen Infrastructure | Franchise vs. Pinetree Capital |
Sally Beauty vs. Macys Inc | Sally Beauty vs. Wayfair | Sally Beauty vs. 1StdibsCom | Sally Beauty vs. AutoNation |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |