Correlation Between ELF Beauty and Edgewell Personal
Can any of the company-specific risk be diversified away by investing in both ELF Beauty and Edgewell Personal 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 ELF Beauty and Edgewell Personal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELF Beauty and Edgewell Personal Care, you can compare the effects of market volatilities on ELF Beauty and Edgewell Personal 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 ELF Beauty with a short position of Edgewell Personal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELF Beauty and Edgewell Personal.
Diversification Opportunities for ELF Beauty and Edgewell Personal
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ELF and Edgewell is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ELF Beauty and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care and ELF 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 ELF Beauty are associated (or correlated) with Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of ELF Beauty i.e., ELF Beauty and Edgewell Personal go up and down completely randomly.
Pair Corralation between ELF Beauty and Edgewell Personal
Considering the 90-day investment horizon ELF Beauty is expected to generate 3.02 times more return on investment than Edgewell Personal. However, ELF Beauty is 3.02 times more volatile than Edgewell Personal Care. It trades about 0.19 of its potential returns per unit of risk. Edgewell Personal Care is currently generating about 0.14 per unit of risk. If you would invest 11,006 in ELF Beauty on August 28, 2024 and sell it today you would earn a total of 1,987 from holding ELF Beauty or generate 18.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELF Beauty vs. Edgewell Personal Care
Performance |
| Timeline |
| ELF Beauty |
| Edgewell Personal Care |
ELF Beauty and Edgewell Personal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELF Beauty and Edgewell Personal
The main advantage of trading using opposite ELF Beauty and Edgewell Personal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELF Beauty position performs unexpectedly, Edgewell Personal 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 Edgewell Personal will offset losses from the drop in Edgewell Personal's long position.| ELF Beauty vs. Procter Gamble | ELF Beauty vs. Colgate Palmolive | ELF Beauty vs. Coty Inc | ELF Beauty vs. Kenvue Inc |
| Edgewell Personal vs. Mannatech Incorporated | Edgewell Personal vs. Inter Parfums | Edgewell Personal vs. Nu Skin Enterprises | Edgewell Personal vs. Helen of Troy |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |