Correlation Between Beauty Health and Virgin Group
Can any of the company-specific risk be diversified away by investing in both Beauty Health and Virgin Group 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 Beauty Health and Virgin Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beauty Health Co and Virgin Group Acquisition, you can compare the effects of market volatilities on Beauty Health and Virgin Group 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 Beauty Health with a short position of Virgin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beauty Health and Virgin Group.
Diversification Opportunities for Beauty Health and Virgin Group
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beauty and Virgin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Health Co and Virgin Group Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Group Acquisition and Beauty Health 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 Beauty Health Co are associated (or correlated) with Virgin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Group Acquisition has no effect on the direction of Beauty Health i.e., Beauty Health and Virgin Group go up and down completely randomly.
Pair Corralation between Beauty Health and Virgin Group
Given the investment horizon of 90 days Beauty Health Co is expected to generate 0.84 times more return on investment than Virgin Group. However, Beauty Health Co is 1.2 times less risky than Virgin Group. It trades about 0.23 of its potential returns per unit of risk. Virgin Group Acquisition is currently generating about 0.0 per unit of risk. If you would invest 142.00 in Beauty Health Co on October 20, 2024 and sell it today you would earn a total of 32.00 from holding Beauty Health Co or generate 22.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beauty Health Co vs. Virgin Group Acquisition
Performance |
| Timeline |
| Beauty Health |
| Virgin Group Acquisition |
Beauty Health and Virgin Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beauty Health and Virgin Group
The main advantage of trading using opposite Beauty Health and Virgin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beauty Health position performs unexpectedly, Virgin Group 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 Virgin Group will offset losses from the drop in Virgin Group's long position.| Beauty Health vs. Clear Secure | Beauty Health vs. GXO Logistics | Beauty Health vs. Doximity | Beauty Health vs. Figs Inc |
| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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