Correlation Between Shiseido and European Wax
Can any of the company-specific risk be diversified away by investing in both Shiseido 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 Shiseido and European Wax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shiseido Company and European Wax Center, you can compare the effects of market volatilities on Shiseido 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 Shiseido with a short position of European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiseido and European Wax.
Diversification Opportunities for Shiseido and European Wax
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shiseido and European is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shiseido Company 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 Shiseido 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 Shiseido Company 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 Shiseido i.e., Shiseido and European Wax go up and down completely randomly.
Pair Corralation between Shiseido and European Wax
Assuming the 90 days horizon Shiseido Company is expected to under-perform the European Wax. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shiseido Company is 2.99 times less risky than European Wax. The pink sheet trades about -0.36 of its potential returns per unit of risk. The European Wax Center is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 729.00 in European Wax Center on August 28, 2024 and sell it today you would lose (95.00) from holding European Wax Center or give up 13.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shiseido Company vs. European Wax Center
Performance |
| Timeline |
| Shiseido |
| European Wax Center |
Shiseido and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shiseido and European Wax
The main advantage of trading using opposite Shiseido and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shiseido 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.| Shiseido vs. Reckitt Benckiser Group | Shiseido vs. Church Dwight | Shiseido vs. Kimberly Clark de Mexico | Shiseido vs. LOreal Co ADR |
| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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