Correlation Between EBay and Ulta Beauty
Can any of the company-specific risk be diversified away by investing in both EBay 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 EBay and Ulta Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eBay Inc and Ulta Beauty, you can compare the effects of market volatilities on EBay 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 EBay with a short position of Ulta Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and Ulta Beauty.
Diversification Opportunities for EBay and Ulta Beauty
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EBay and Ulta is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding eBay Inc and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty and EBay 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 eBay 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 EBay i.e., EBay and Ulta Beauty go up and down completely randomly.
Pair Corralation between EBay and Ulta Beauty
Assuming the 90 days horizon eBay Inc is expected to generate 1.08 times more return on investment than Ulta Beauty. However, EBay is 1.08 times more volatile than Ulta Beauty. It trades about -0.08 of its potential returns per unit of risk. Ulta Beauty is currently generating about -0.14 per unit of risk. If you would invest 6,705 in eBay Inc on November 9, 2024 and sell it today you would lose (220.00) from holding eBay Inc or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
eBay Inc vs. Ulta Beauty
Performance |
| Timeline |
| eBay Inc |
| Ulta Beauty |
EBay and Ulta Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBay and Ulta Beauty
The main advantage of trading using opposite EBay and Ulta Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBay 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.| EBay vs. PULSION Medical Systems | EBay vs. SPORT LISBOA E | EBay vs. Compugroup Medical SE | EBay vs. Diamyd Medical AB |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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