Correlation Between Dixons Carphone and Ulta Beauty
Can any of the company-specific risk be diversified away by investing in both Dixons Carphone 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 Dixons Carphone and Ulta Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dixons Carphone plc and Ulta Beauty, you can compare the effects of market volatilities on Dixons Carphone 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 Dixons Carphone with a short position of Ulta Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dixons Carphone and Ulta Beauty.
Diversification Opportunities for Dixons Carphone and Ulta Beauty
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dixons and Ulta is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dixons Carphone plc and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty and Dixons Carphone 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 Dixons Carphone plc 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 Dixons Carphone i.e., Dixons Carphone and Ulta Beauty go up and down completely randomly.
Pair Corralation between Dixons Carphone and Ulta Beauty
Assuming the 90 days horizon Dixons Carphone plc is expected to under-perform the Ulta Beauty. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dixons Carphone plc is 1.39 times less risky than Ulta Beauty. The pink sheet trades about -0.32 of its potential returns per unit of risk. The Ulta Beauty is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 37,765 in Ulta Beauty on September 2, 2024 and sell it today you would earn a total of 899.00 from holding Ulta Beauty or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dixons Carphone plc vs. Ulta Beauty
Performance |
| Timeline |
| Dixons Carphone plc |
| Ulta Beauty |
Dixons Carphone and Ulta Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dixons Carphone and Ulta Beauty
The main advantage of trading using opposite Dixons Carphone and Ulta Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dixons Carphone 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.| Dixons Carphone vs. Ulta Beauty | Dixons Carphone vs. Williams Sonoma | Dixons Carphone vs. Dicks Sporting Goods | Dixons Carphone vs. Best Buy Co |
| Ulta Beauty vs. Williams Sonoma | Ulta Beauty vs. Dicks Sporting Goods | Ulta Beauty vs. Best Buy Co | Ulta Beauty vs. AutoZone |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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