Correlation Between Dupont De and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both Dupont De and Sally 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 Dupont De and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dupont De Nemours and Sally Beauty Holdings, you can compare the effects of market volatilities on Dupont De and Sally 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 Dupont De with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Sally Beauty.
Diversification Opportunities for Dupont De and Sally Beauty
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dupont and Sally is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Sally Beauty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sally Beauty Holdings and Dupont De 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 Dupont De Nemours are associated (or correlated) with Sally Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sally Beauty Holdings has no effect on the direction of Dupont De i.e., Dupont De and Sally Beauty go up and down completely randomly.
Pair Corralation between Dupont De and Sally Beauty
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Sally Beauty. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 2.21 times less risky than Sally Beauty. The stock trades about -0.1 of its potential returns per unit of risk. The Sally Beauty Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,357 in Sally Beauty Holdings on August 30, 2024 and sell it today you would earn a total of 57.00 from holding Sally Beauty Holdings or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. Sally Beauty Holdings
Performance |
| Timeline |
| Dupont De Nemours |
| Sally Beauty Holdings |
Dupont De and Sally Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Sally Beauty
The main advantage of trading using opposite Dupont De and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Sally 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 Sally Beauty will offset losses from the drop in Sally Beauty's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Sally Beauty vs. Leslies | Sally Beauty vs. National Vision Holdings | Sally Beauty vs. Sportsmans | Sally Beauty vs. MarineMax |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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