Correlation Between Ulta Beauty and Best Buy
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Best Buy 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 Ulta Beauty and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Best Buy Co, you can compare the effects of market volatilities on Ulta Beauty and Best Buy 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 Ulta Beauty with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Best Buy.
Diversification Opportunities for Ulta Beauty and Best Buy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ulta and Best is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Ulta 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 Ulta Beauty are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Best Buy go up and down completely randomly.
Pair Corralation between Ulta Beauty and Best Buy
Assuming the 90 days trading horizon Ulta Beauty is expected to generate 2.42 times more return on investment than Best Buy. However, Ulta Beauty is 2.42 times more volatile than Best Buy Co. It trades about -0.12 of its potential returns per unit of risk. Best Buy Co is currently generating about -0.32 per unit of risk. If you would invest 13,400 in Ulta Beauty on October 24, 2024 and sell it today you would lose (777.00) from holding Ulta Beauty or give up 5.8% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 94.74% |
Values | Daily Returns |
Ulta Beauty vs. Best Buy Co
Performance |
Timeline |
Ulta Beauty |
Best Buy |
Ulta Beauty and Best Buy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ulta Beauty and Best Buy
The main advantage of trading using opposite Ulta Beauty and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.Ulta Beauty vs. Zoom Video Communications | Ulta Beauty vs. Paycom Software | Ulta Beauty vs. Melco Resorts Entertainment | Ulta Beauty vs. salesforce inc |
Best Buy vs. Marisa Lojas SA | Best Buy vs. Vivara Participaes SA | Best Buy vs. Guararapes Confeces SA | Best Buy vs. Atacado SA |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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