Correlation Between Spectrum Brands and European Wax
Can any of the company-specific risk be diversified away by investing in both Spectrum Brands and European Wax 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 Spectrum Brands and European Wax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Brands Holdings and European Wax Center, you can compare the effects of market volatilities on Spectrum Brands and European Wax 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 Spectrum Brands with a short position of European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and European Wax.
Diversification Opportunities for Spectrum Brands and European Wax
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Spectrum and European is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center and Spectrum Brands 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 Spectrum Brands Holdings are associated (or correlated) with European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Spectrum Brands i.e., Spectrum Brands and European Wax go up and down completely randomly.
Pair Corralation between Spectrum Brands and European Wax
Considering the 90-day investment horizon Spectrum Brands Holdings is expected to generate 0.34 times more return on investment than European Wax. However, Spectrum Brands Holdings is 2.92 times less risky than European Wax. It trades about -0.01 of its potential returns per unit of risk. European Wax Center is currently generating about -0.01 per unit of risk. If you would invest 9,194 in Spectrum Brands Holdings on August 24, 2024 and sell it today you would lose (168.00) from holding Spectrum Brands Holdings or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum Brands Holdings vs. European Wax Center
Performance |
| Timeline |
| Spectrum Brands Holdings |
| European Wax Center |
Spectrum Brands and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum Brands and European Wax
The main advantage of trading using opposite Spectrum Brands and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands position performs unexpectedly, European Wax 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 European Wax will offset losses from the drop in European Wax's long position.| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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