Correlation Between Leslies and Ulta Beauty
Can any of the company-specific risk be diversified away by investing in both Leslies and Ulta Beauty 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 Leslies and Ulta Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leslies and Ulta Beauty, you can compare the effects of market volatilities on Leslies and Ulta Beauty 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 Leslies with a short position of Ulta Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leslies and Ulta Beauty.
Diversification Opportunities for Leslies and Ulta Beauty
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leslies and Ulta is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Leslies and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty and Leslies 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 Leslies are associated (or correlated) with Ulta Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ulta Beauty has no effect on the direction of Leslies i.e., Leslies and Ulta Beauty go up and down completely randomly.
Pair Corralation between Leslies and Ulta Beauty
Given the investment horizon of 90 days Leslies is expected to under-perform the Ulta Beauty. In addition to that, Leslies is 3.66 times more volatile than Ulta Beauty. It trades about -0.29 of its total potential returns per unit of risk. Ulta Beauty is currently generating about -0.32 per unit of volatility. If you would invest 41,500 in Ulta Beauty on November 27, 2024 and sell it today you would lose (5,111) from holding Ulta Beauty or give up 12.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leslies vs. Ulta Beauty
Performance |
| Timeline |
| Leslies |
| Ulta Beauty |
Leslies and Ulta Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leslies and Ulta Beauty
The main advantage of trading using opposite Leslies and Ulta Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leslies position performs unexpectedly, Ulta Beauty 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 Ulta Beauty will offset losses from the drop in Ulta Beauty's long position.| Leslies vs. Sally Beauty Holdings | Leslies vs. ODP Corp | Leslies vs. 1 800 FLOWERSCOM | Leslies vs. Caseys General Stores |
| Ulta Beauty vs. Williams Sonoma | Ulta Beauty vs. Dicks Sporting Goods | Ulta Beauty vs. Best Buy Co | Ulta Beauty vs. AutoZone |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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