Correlation Between ELF Beauty and Spectrum Brands
Can any of the company-specific risk be diversified away by investing in both ELF Beauty and Spectrum Brands 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 Spectrum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELF Beauty and Spectrum Brands Holdings, you can compare the effects of market volatilities on ELF Beauty and Spectrum Brands 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 Spectrum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELF Beauty and Spectrum Brands.
Diversification Opportunities for ELF Beauty and Spectrum Brands
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ELF and Spectrum is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ELF Beauty and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings 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 Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of ELF Beauty i.e., ELF Beauty and Spectrum Brands go up and down completely randomly.
Pair Corralation between ELF Beauty and Spectrum Brands
Considering the 90-day investment horizon ELF Beauty is expected to generate 2.36 times more return on investment than Spectrum Brands. However, ELF Beauty is 2.36 times more volatile than Spectrum Brands Holdings. It trades about 0.1 of its potential returns per unit of risk. Spectrum Brands Holdings is currently generating about 0.02 per unit of risk. If you would invest 11,467 in ELF Beauty on September 12, 2024 and sell it today you would earn a total of 2,377 from holding ELF Beauty or generate 20.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELF Beauty vs. Spectrum Brands Holdings
Performance |
| Timeline |
| ELF Beauty |
| Spectrum Brands Holdings |
ELF Beauty and Spectrum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELF Beauty and Spectrum Brands
The main advantage of trading using opposite ELF Beauty and Spectrum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELF Beauty position performs unexpectedly, Spectrum Brands 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 Spectrum Brands will offset losses from the drop in Spectrum Brands' long position.| ELF Beauty vs. Procter Gamble | ELF Beauty vs. Colgate Palmolive | ELF Beauty vs. Coty Inc | ELF Beauty vs. Kenvue Inc |
| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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