Correlation Between European Wax and CCA Industries
Can any of the company-specific risk be diversified away by investing in both European Wax and CCA Industries 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 CCA Industries 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 CCA Industries, you can compare the effects of market volatilities on European Wax and CCA Industries 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 CCA Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and CCA Industries.
Diversification Opportunities for European Wax and CCA Industries
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between European and CCA is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and CCA Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCA Industries 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 CCA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCA Industries has no effect on the direction of European Wax i.e., European Wax and CCA Industries go up and down completely randomly.
Pair Corralation between European Wax and CCA Industries
Given the investment horizon of 90 days European Wax Center is expected to under-perform the CCA Industries. But the stock apears to be less risky and, when comparing its historical volatility, European Wax Center is 2.94 times less risky than CCA Industries. The stock trades about -0.03 of its potential returns per unit of risk. The CCA Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 66.00 in CCA Industries on September 3, 2024 and sell it today you would earn a total of 11.00 from holding CCA Industries or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 7.88% |
| Values | Daily Returns |
European Wax Center vs. CCA Industries
Performance |
| Timeline |
| European Wax Center |
| CCA Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
European Wax and CCA Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and CCA Industries
The main advantage of trading using opposite European Wax and CCA Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax position performs unexpectedly, CCA Industries 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 CCA Industries will offset losses from the drop in CCA Industries' long position.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Mannatech Incorporated | European Wax vs. Spectrum Brands Holdings |
| CCA Industries vs. Firan Technology Group | CCA Industries vs. FitLife Brands, Common | CCA Industries vs. ENB Financial Corp | CCA Industries vs. Surge Components |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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