Correlation Between Beauty Health and Earthgrains

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

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

Diversification Opportunities for Beauty Health and Earthgrains

0.0

Correlation Coefficient

Beauty Health  Earthgrains

Pay attention - limited upside

The 3 months correlation between Beauty and Earthgrains is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Health Co and Earthgrains Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Earthgrains and Beauty Health 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 Beauty Health Co are associated (or correlated) with Earthgrains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Earthgrains has no effect on the direction of Beauty Health i.e., Beauty Health and Earthgrains go up and down completely randomly.

Pair Corralation between Beauty Health and Earthgrains

If you would invest (100.00) in Earthgrains Co on October 3, 2024 and sell it today you would earn a total of  100.00  from holding Earthgrains Co or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Beauty Health Co  vs.  Earthgrains Co

Beauty Health

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beauty Health Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Beauty Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Earthgrains

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Earthgrains Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Earthgrains is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Beauty Health and Earthgrains

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

The idea behind Beauty Health Co and Earthgrains Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.