Correlation Between European Wax and Energizer Holdings
Can any of the company-specific risk be diversified away by investing in both European Wax and Energizer Holdings 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 Energizer Holdings 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 Energizer Holdings, you can compare the effects of market volatilities on European Wax and Energizer Holdings 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 Energizer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Energizer Holdings.
Diversification Opportunities for European Wax and Energizer Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between European and Energizer is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Energizer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energizer Holdings 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 Energizer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energizer Holdings has no effect on the direction of European Wax i.e., European Wax and Energizer Holdings go up and down completely randomly.
Pair Corralation between European Wax and Energizer Holdings
Given the investment horizon of 90 days European Wax Center is expected to generate 1.58 times more return on investment than Energizer Holdings. However, European Wax is 1.58 times more volatile than Energizer Holdings. It trades about 0.08 of its potential returns per unit of risk. Energizer Holdings is currently generating about 0.13 per unit of risk. If you would invest 550.00 in European Wax Center on September 18, 2024 and sell it today you would earn a total of 30.00 from holding European Wax Center or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. Energizer Holdings
Performance |
| Timeline |
| European Wax Center |
| Energizer Holdings |
European Wax and Energizer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and Energizer Holdings
The main advantage of trading using opposite European Wax and Energizer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax position performs unexpectedly, Energizer Holdings 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 Energizer Holdings will offset losses from the drop in Energizer Holdings' long position.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
| Energizer Holdings vs. H B Fuller | Energizer Holdings vs. Minerals Technologies | Energizer Holdings vs. Quaker Chemical | Energizer Holdings vs. Sensient Technologies |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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