Correlation Between 111 and Ulta Beauty
Can any of the company-specific risk be diversified away by investing in both 111 and Ulta Beauty 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 111 and Ulta Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 111 Inc and Ulta Beauty, you can compare the effects of market volatilities on 111 and Ulta Beauty 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 111 with a short position of Ulta Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of 111 and Ulta Beauty.
Diversification Opportunities for 111 and Ulta Beauty
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 111 and Ulta is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding 111 Inc and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty and 111 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 111 Inc are associated (or correlated) with Ulta Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ulta Beauty has no effect on the direction of 111 i.e., 111 and Ulta Beauty go up and down completely randomly.
Pair Corralation between 111 and Ulta Beauty
Allowing for the 90-day total investment horizon 111 Inc is expected to under-perform the Ulta Beauty. In addition to that, 111 is 2.41 times more volatile than Ulta Beauty. It trades about -0.03 of its total potential returns per unit of risk. Ulta Beauty is currently generating about -0.03 per unit of volatility. If you would invest 52,418 in Ulta Beauty on December 4, 2024 and sell it today you would lose (18,073) from holding Ulta Beauty or give up 34.48% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
111 Inc vs. Ulta Beauty
Performance |
Timeline |
111 Inc |
Ulta Beauty |
111 and Ulta Beauty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with 111 and Ulta Beauty
The main advantage of trading using opposite 111 and Ulta Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 111 position performs unexpectedly, Ulta Beauty 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 Ulta Beauty will offset losses from the drop in Ulta Beauty's long position.111 vs. Walgreens Boots Alliance | 111 vs. PetMed Express | 111 vs. China Jo Jo Drugstores | 111 vs. High Tide |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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