Correlation Between Revolution Beauty and Everyman Media

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

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

Diversification Opportunities for Revolution Beauty and Everyman Media

0.81

Correlation Coefficient

Revolution Beauty  Everyman Media

Very poor diversification

The 3 months correlation between Revolution and Everyman is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Beauty Group and Everyman Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everyman Media Group and Revolution Beauty 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 Revolution Beauty Group are associated (or correlated) with Everyman Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everyman Media Group has no effect on the direction of Revolution Beauty i.e., Revolution Beauty and Everyman Media go up and down completely randomly.

Pair Corralation between Revolution Beauty and Everyman Media

Assuming the 90 days trading horizon Revolution Beauty Group is expected to generate 2.41 times more return on investment than Everyman Media. However, Revolution Beauty is 2.41 times more volatile than Everyman Media Group. It trades about -0.01 of its potential returns per unit of risk. Everyman Media Group is currently generating about -0.02 per unit of risk. If you would invest  1,900  in Revolution Beauty Group on August 31, 2024 and sell it today you would lose (655.00) from holding Revolution Beauty Group or give up 34.47% of portfolio value over 90 days.

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

Revolution Beauty Group  vs.  Everyman Media Group

Revolution Beauty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revolution Beauty Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Everyman Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everyman Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Revolution Beauty and Everyman Media

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

The idea behind Revolution Beauty Group and Everyman Media Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.