Correlation Between 26442CAB0 and Beauty Health

Can any of the company-specific risk be diversified away by investing in both 26442CAB0 and Beauty Health 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 26442CAB0 and Beauty Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DUKE ENERGY CAROLINAS and Beauty Health Co, you can compare the effects of market volatilities on 26442CAB0 and Beauty Health 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 26442CAB0 with a short position of Beauty Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26442CAB0 and Beauty Health.

Diversification Opportunities for 26442CAB0 and Beauty Health

-0.2

Correlation Coefficient

26442CAB0  Beauty Health

Good diversification

The 3 months correlation between 26442CAB0 and Beauty is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding DUKE ENERGY CAROLINAS and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health and 26442CAB0 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 DUKE ENERGY CAROLINAS are associated (or correlated) with Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of 26442CAB0 i.e., 26442CAB0 and Beauty Health go up and down completely randomly.

Pair Corralation between 26442CAB0 and Beauty Health

Assuming the 90 days trading horizon DUKE ENERGY CAROLINAS is expected to under-perform the Beauty Health. But the bond apears to be less risky and, when comparing its historical volatility, DUKE ENERGY CAROLINAS is 6.43 times less risky than Beauty Health. The bond trades about -0.04 of its potential returns per unit of risk. The Beauty Health Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  144.00  in Beauty Health Co on October 24, 2024 and sell it today you would earn a total of  23.00  from holding Beauty Health Co or generate 15.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.21%
Values	Daily Returns

DUKE ENERGY CAROLINAS  vs.  Beauty Health Co

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY CAROLINAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442CAB0 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Beauty Health

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beauty Health Co are ranked lower than 1 (%) 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.

Pair Trading with 26442CAB0 and Beauty Health

The main advantage of trading using opposite 26442CAB0 and Beauty Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26442CAB0 position performs unexpectedly, Beauty Health 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 Beauty Health will offset losses from the drop in Beauty Health's long position.

The idea behind DUKE ENERGY CAROLINAS and Beauty Health 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.