Correlation Between Ulta Beauty and Etsy
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Etsy 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 Etsy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Etsy Inc, you can compare the effects of market volatilities on Ulta Beauty and Etsy 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 Etsy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Etsy.
Diversification Opportunities for Ulta Beauty and Etsy
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ulta and Etsy is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc 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 Etsy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etsy Inc has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Etsy go up and down completely randomly.
Pair Corralation between Ulta Beauty and Etsy
Assuming the 90 days horizon Ulta Beauty is expected to under-perform the Etsy. But the stock apears to be less risky and, when comparing its historical volatility, Ulta Beauty is 1.36 times less risky than Etsy. The stock trades about -0.14 of its potential returns per unit of risk. The Etsy Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,142 in Etsy Inc on November 9, 2024 and sell it today you would earn a total of 123.00 from holding Etsy Inc or generate 2.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ulta Beauty vs. Etsy Inc
Performance |
| Timeline |
| Ulta Beauty |
| Etsy Inc |
Ulta Beauty and Etsy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ulta Beauty and Etsy
The main advantage of trading using opposite Ulta Beauty and Etsy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Etsy 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 Etsy will offset losses from the drop in Etsy's long position.| Ulta Beauty vs. LIFEWAY FOODS | Ulta Beauty vs. GUARDANT HEALTH CL | Ulta Beauty vs. PREMIER FOODS | Ulta Beauty vs. Axfood AB |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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