Correlation Between European Wax and Beiersdorf
Can any of the company-specific risk be diversified away by investing in both European Wax and Beiersdorf 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 European Wax and Beiersdorf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and Beiersdorf AG ADR, you can compare the effects of market volatilities on European Wax and Beiersdorf 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 European Wax with a short position of Beiersdorf. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Beiersdorf.
Diversification Opportunities for European Wax and Beiersdorf
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between European and Beiersdorf is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Beiersdorf AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beiersdorf AG ADR and European Wax 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 European Wax Center are associated (or correlated) with Beiersdorf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beiersdorf AG ADR has no effect on the direction of European Wax i.e., European Wax and Beiersdorf go up and down completely randomly.
Pair Corralation between European Wax and Beiersdorf
Given the investment horizon of 90 days European Wax Center is expected to under-perform the Beiersdorf. In addition to that, European Wax is 3.28 times more volatile than Beiersdorf AG ADR. It trades about -0.03 of its total potential returns per unit of risk. Beiersdorf AG ADR is currently generating about 0.03 per unit of volatility. If you would invest 2,356 in Beiersdorf AG ADR on November 29, 2024 and sell it today you would earn a total of 357.00 from holding Beiersdorf AG ADR or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. Beiersdorf AG ADR
Performance |
| Timeline |
| European Wax Center |
| Beiersdorf AG ADR |
European Wax and Beiersdorf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and Beiersdorf
The main advantage of trading using opposite European Wax and Beiersdorf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax position performs unexpectedly, Beiersdorf 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 Beiersdorf will offset losses from the drop in Beiersdorf's long position.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
| Beiersdorf vs. Kao Corp ADR | Beiersdorf vs. Henkel AG Co | Beiersdorf vs. Henkel Ag A | Beiersdorf vs. Carlsberg AS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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