Correlation Between Ulta Beauty and Yamada Holdings

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

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

Diversification Opportunities for Ulta Beauty and Yamada Holdings

0.0

Correlation Coefficient

Ulta Beauty  Yamada Holdings

Pay attention - limited upside

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

Pair Corralation between Ulta Beauty and Yamada Holdings

If you would invest  38,929  in Ulta Beauty on September 14, 2024 and sell it today you would earn a total of  3,296  from holding Ulta Beauty or generate 8.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ulta Beauty  vs.  Yamada Holdings Co

Ulta Beauty

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ulta Beauty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Ulta Beauty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Yamada Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yamada Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yamada Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ulta Beauty and Yamada Holdings

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

The idea behind Ulta Beauty and Yamada Holdings 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.