Correlation Between Ulta Beauty and Nuvve Holding

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

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

Diversification Opportunities for Ulta Beauty and Nuvve Holding

-0.49

Correlation Coefficient

Ulta Beauty  Nuvve Holding

Very good diversification

The 3 months correlation between Ulta and Nuvve is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Nuvve Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvve Holding Corp 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 Nuvve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvve Holding Corp has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Nuvve Holding go up and down completely randomly.

Pair Corralation between Ulta Beauty and Nuvve Holding

Given the investment horizon of 90 days Ulta Beauty is expected to generate 0.19 times more return on investment than Nuvve Holding. However, Ulta Beauty is 5.26 times less risky than Nuvve Holding. It trades about -0.05 of its potential returns per unit of risk. Nuvve Holding Corp is currently generating about -0.09 per unit of risk. If you would invest  42,411  in Ulta Beauty on October 14, 2024 and sell it today you would lose (588.00) from holding Ulta Beauty or give up 1.39% of portfolio value over 90 days.

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

Ulta Beauty  vs.  Nuvve Holding Corp

Ulta Beauty

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ulta Beauty are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Ulta Beauty sustained solid returns over the last few months and may actually be approaching a breakup point.

Nuvve Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvve Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ulta Beauty and Nuvve Holding

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

The idea behind Ulta Beauty and Nuvve Holding Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.