Correlation Between Sally Beauty and Sportsmans
Can any of the company-specific risk be diversified away by investing in both Sally Beauty and Sportsmans 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 Sportsmans 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 Sportsmans, you can compare the effects of market volatilities on Sally Beauty and Sportsmans 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 Sportsmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sally Beauty and Sportsmans.
Diversification Opportunities for Sally Beauty and Sportsmans
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sally and Sportsmans is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sally Beauty Holdings and Sportsmans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans 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 Sportsmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans has no effect on the direction of Sally Beauty i.e., Sally Beauty and Sportsmans go up and down completely randomly.
Pair Corralation between Sally Beauty and Sportsmans
Considering the 90-day investment horizon Sally Beauty Holdings is expected to generate 0.72 times more return on investment than Sportsmans. However, Sally Beauty Holdings is 1.39 times less risky than Sportsmans. It trades about 0.02 of its potential returns per unit of risk. Sportsmans is currently generating about -0.06 per unit of risk. If you would invest 1,129 in Sally Beauty Holdings on August 27, 2024 and sell it today you would earn a total of 168.00 from holding Sally Beauty Holdings or generate 14.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sally Beauty Holdings vs. Sportsmans
Performance |
| Timeline |
| Sally Beauty Holdings |
| Sportsmans |
Sally Beauty and Sportsmans Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sally Beauty and Sportsmans
The main advantage of trading using opposite Sally Beauty and Sportsmans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sally Beauty position performs unexpectedly, Sportsmans 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 Sportsmans will offset losses from the drop in Sportsmans' long position.| Sally Beauty vs. Oriental Culture Holding | Sally Beauty vs. Hour Loop | Sally Beauty vs. Qurate Retail Series | Sally Beauty vs. Emerge Commerce |
| Sportsmans vs. MarineMax | Sportsmans vs. Build A Bear Workshop | Sportsmans vs. Leslies | Sportsmans vs. Sally Beauty Holdings |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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