Correlation Between Ulta Beauty and Westwing Comrcio

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

By analyzing existing cross correlation between Ulta Beauty and Westwing Comrcio Varejista, you can compare the effects of market volatilities on Ulta Beauty and Westwing Comrcio 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 Westwing Comrcio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Westwing Comrcio.

Diversification Opportunities for Ulta Beauty and Westwing Comrcio

-0.86

Correlation Coefficient

Ulta Beauty  Westwing Comrcio

Pay attention - limited upside

The 3 months correlation between Ulta and Westwing is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Westwing Comrcio Varejista in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwing Comrcio Var 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 Westwing Comrcio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwing Comrcio Var has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Westwing Comrcio go up and down completely randomly.

Pair Corralation between Ulta Beauty and Westwing Comrcio

Assuming the 90 days trading horizon Ulta Beauty is expected to generate 0.89 times more return on investment than Westwing Comrcio. However, Ulta Beauty is 1.12 times less risky than Westwing Comrcio. It trades about 0.17 of its potential returns per unit of risk. Westwing Comrcio Varejista is currently generating about -0.35 per unit of risk. If you would invest  10,989  in Ulta Beauty on October 6, 2024 and sell it today you would earn a total of  2,231  from holding Ulta Beauty or generate 20.3% return on investment over 90 days.

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

Ulta Beauty  vs.  Westwing Comrcio Varejista

Ulta Beauty

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ulta Beauty are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Ulta Beauty sustained solid returns over the last few months and may actually be approaching a breakup point.

Westwing Comrcio Var

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westwing Comrcio Varejista 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ulta Beauty and Westwing Comrcio

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

The idea behind Ulta Beauty and Westwing Comrcio Varejista 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.