Correlation Between MarineMax and Sally Beauty

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

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

Diversification Opportunities for MarineMax and Sally Beauty

0.65

Correlation Coefficient

MarineMax  Sally Beauty

Poor diversification

The 3 months correlation between MarineMax and Sally is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding MarineMax 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 MarineMax 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 MarineMax 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 MarineMax i.e., MarineMax and Sally Beauty go up and down completely randomly.

Pair Corralation between MarineMax and Sally Beauty

Considering the 90-day investment horizon MarineMax is expected to under-perform the Sally Beauty. In addition to that, MarineMax is 1.21 times more volatile than Sally Beauty Holdings. It trades about -0.06 of its total potential returns per unit of risk. Sally Beauty Holdings is currently generating about -0.06 per unit of volatility. If you would invest  1,000.00  in Sally Beauty Holdings on December 29, 2024 and sell it today you would lose (115.00) from holding Sally Beauty Holdings or give up 11.5% of portfolio value over 90 days.

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

MarineMax  vs.  Sally Beauty Holdings

MarineMax

Risk-Adjusted Performance

Very Weak

Over the last 90 days MarineMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sally Beauty Holdings

Risk-Adjusted Performance

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 latest conflicting performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with MarineMax and Sally Beauty

The main advantage of trading using opposite MarineMax and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MarineMax 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 MarineMax 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.