Correlation Between Tractor Supply and Ulta Beauty
Can any of the company-specific risk be diversified away by investing in both Tractor Supply and Ulta Beauty 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 Tractor Supply and Ulta Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tractor Supply and Ulta Beauty, you can compare the effects of market volatilities on Tractor Supply and Ulta Beauty 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 Tractor Supply with a short position of Ulta Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tractor Supply and Ulta Beauty.
Diversification Opportunities for Tractor Supply and Ulta Beauty
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tractor and Ulta is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tractor Supply and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty and Tractor Supply 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 Tractor Supply are associated (or correlated) with Ulta Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ulta Beauty has no effect on the direction of Tractor Supply i.e., Tractor Supply and Ulta Beauty go up and down completely randomly.
Pair Corralation between Tractor Supply and Ulta Beauty
Assuming the 90 days trading horizon Tractor Supply is expected to generate 26.03 times less return on investment than Ulta Beauty. But when comparing it to its historical volatility, Tractor Supply is 1.21 times less risky than Ulta Beauty. It trades about 0.01 of its potential returns per unit of risk. Ulta Beauty is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 10,250 in Ulta Beauty on October 14, 2024 and sell it today you would earn a total of 2,605 from holding Ulta Beauty or generate 25.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tractor Supply vs. Ulta Beauty
Performance |
| Timeline |
| Tractor Supply |
| Ulta Beauty |
Tractor Supply and Ulta Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tractor Supply and Ulta Beauty
The main advantage of trading using opposite Tractor Supply and Ulta Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tractor Supply position performs unexpectedly, Ulta Beauty 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 Ulta Beauty will offset losses from the drop in Ulta Beauty's long position.| Tractor Supply vs. OReilly Automotive | Tractor Supply vs. AutoZone, | Tractor Supply vs. Ulta Beauty | Tractor Supply vs. Magazine Luiza SA |
| Ulta Beauty vs. OReilly Automotive | Ulta Beauty vs. AutoZone, | Ulta Beauty vs. Tractor Supply | Ulta Beauty vs. Magazine Luiza SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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