Correlation Between ODP Corp and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both ODP Corp and Sally 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 ODP Corp and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ODP Corp and Sally Beauty Holdings, you can compare the effects of market volatilities on ODP Corp and Sally 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 ODP Corp with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of ODP Corp and Sally Beauty.
Diversification Opportunities for ODP Corp and Sally Beauty
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ODP and Sally is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ODP Corp and Sally Beauty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sally Beauty Holdings and ODP Corp 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 ODP Corp are associated (or correlated) with Sally Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sally Beauty Holdings has no effect on the direction of ODP Corp i.e., ODP Corp and Sally Beauty go up and down completely randomly.
Pair Corralation between ODP Corp and Sally Beauty
Considering the 90-day investment horizon ODP Corp is expected to under-perform the Sally Beauty. In addition to that, ODP Corp is 1.1 times more volatile than Sally Beauty Holdings. It trades about -0.08 of its total potential returns per unit of risk. Sally Beauty Holdings is currently generating about -0.07 per unit of volatility. If you would invest 1,332 in Sally Beauty Holdings on November 1, 2024 and sell it today you would lose (229.00) from holding Sally Beauty Holdings or give up 17.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ODP Corp vs. Sally Beauty Holdings
Performance |
| Timeline |
| ODP Corp |
| Sally Beauty Holdings |
ODP Corp and Sally Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ODP Corp and Sally Beauty
The main advantage of trading using opposite ODP Corp and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ODP Corp position performs unexpectedly, Sally 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 Sally Beauty will offset losses from the drop in Sally Beauty's long position.| ODP Corp vs. Leslies | ODP Corp vs. Sally Beauty Holdings | ODP Corp vs. 1 800 FLOWERSCOM | ODP Corp vs. Caseys General Stores |
| Sally Beauty vs. Leslies | Sally Beauty vs. National Vision Holdings | Sally Beauty vs. Sportsmans | Sally Beauty vs. MarineMax |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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