Correlation Between Sally Beauty and OReilly Automotive
Can any of the company-specific risk be diversified away by investing in both Sally Beauty and OReilly Automotive 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 Sally Beauty and OReilly Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sally Beauty Holdings and OReilly Automotive, you can compare the effects of market volatilities on Sally Beauty and OReilly Automotive 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 Sally Beauty with a short position of OReilly Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sally Beauty and OReilly Automotive.
Diversification Opportunities for Sally Beauty and OReilly Automotive
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sally and OReilly is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sally Beauty Holdings and OReilly Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OReilly Automotive and Sally Beauty 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 Sally Beauty Holdings are associated (or correlated) with OReilly Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OReilly Automotive has no effect on the direction of Sally Beauty i.e., Sally Beauty and OReilly Automotive go up and down completely randomly.
Pair Corralation between Sally Beauty and OReilly Automotive
Considering the 90-day investment horizon Sally Beauty Holdings is expected to generate 1.97 times more return on investment than OReilly Automotive. However, Sally Beauty is 1.97 times more volatile than OReilly Automotive. It trades about 0.09 of its potential returns per unit of risk. OReilly Automotive is currently generating about 0.1 per unit of risk. If you would invest 1,340 in Sally Beauty Holdings on August 28, 2024 and sell it today you would earn a total of 69.00 from holding Sally Beauty Holdings or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sally Beauty Holdings vs. OReilly Automotive
Performance |
| Timeline |
| Sally Beauty Holdings |
| OReilly Automotive |
Sally Beauty and OReilly Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sally Beauty and OReilly Automotive
The main advantage of trading using opposite Sally Beauty and OReilly Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sally Beauty position performs unexpectedly, OReilly Automotive 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 OReilly Automotive will offset losses from the drop in OReilly Automotive's long position.| Sally Beauty vs. Oriental Culture Holding | Sally Beauty vs. Hour Loop | Sally Beauty vs. Qurate Retail Series | Sally Beauty vs. Emerge Commerce |
| OReilly Automotive vs. Kingsway Financial Services | OReilly Automotive vs. KAR Auction Services | OReilly Automotive vs. Cango Inc | OReilly Automotive vs. Vroom Inc |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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