Correlation Between Beauty Health and PACIFIC

Can any of the company-specific risk be diversified away by investing in both Beauty Health and PACIFIC 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 PACIFIC 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 PACIFIC GAS AND, you can compare the effects of market volatilities on Beauty Health and PACIFIC 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 PACIFIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beauty Health and PACIFIC.

Diversification Opportunities for Beauty Health and PACIFIC

0.23

Correlation Coefficient

Beauty Health  PACIFIC

Modest diversification

The 3 months correlation between Beauty and PACIFIC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Health Co and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of Beauty Health i.e., Beauty Health and PACIFIC go up and down completely randomly.

Pair Corralation between Beauty Health and PACIFIC

Given the investment horizon of 90 days Beauty Health Co is expected to under-perform the PACIFIC. In addition to that, Beauty Health is 5.89 times more volatile than PACIFIC GAS AND. It trades about -0.01 of its total potential returns per unit of risk. PACIFIC GAS AND is currently generating about -0.04 per unit of volatility. If you would invest  8,244  in PACIFIC GAS AND on October 5, 2024 and sell it today you would lose (812.00) from holding PACIFIC GAS AND or give up 9.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Beauty Health Co  vs.  PACIFIC GAS AND

Beauty Health

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beauty Health Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Beauty Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PACIFIC GAS AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for PACIFIC GAS AND investors.

Pair Trading with Beauty Health and PACIFIC

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

The idea behind Beauty Health Co and PACIFIC GAS AND 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.