Correlation Between European Wax and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both European Wax and Inter Parfums 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 Inter Parfums 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 Inter Parfums, you can compare the effects of market volatilities on European Wax and Inter Parfums 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 Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Inter Parfums.
Diversification Opportunities for European Wax and Inter Parfums
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between European and Inter is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums 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 Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of European Wax i.e., European Wax and Inter Parfums go up and down completely randomly.
Pair Corralation between European Wax and Inter Parfums
Given the investment horizon of 90 days European Wax Center is expected to under-perform the Inter Parfums. In addition to that, European Wax is 1.61 times more volatile than Inter Parfums. It trades about -0.05 of its total potential returns per unit of risk. Inter Parfums is currently generating about 0.03 per unit of volatility. If you would invest 11,233 in Inter Parfums on August 27, 2024 and sell it today you would earn a total of 2,174 from holding Inter Parfums or generate 19.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. Inter Parfums
Performance |
| Timeline |
| European Wax Center |
| Inter Parfums |
European Wax and Inter Parfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and Inter Parfums
The main advantage of trading using opposite European Wax and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
| Inter Parfums vs. J J Snack | Inter Parfums vs. John B Sanfilippo | Inter Parfums vs. Innospec | Inter Parfums vs. Independent Bank |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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