Correlation Between TRADEGATE and Ulta Beauty
Can any of the company-specific risk be diversified away by investing in both TRADEGATE 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 TRADEGATE and Ulta Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRADEGATE and Ulta Beauty, you can compare the effects of market volatilities on TRADEGATE 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 TRADEGATE with a short position of Ulta Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADEGATE and Ulta Beauty.
Diversification Opportunities for TRADEGATE and Ulta Beauty
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between TRADEGATE and Ulta is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty and TRADEGATE 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 TRADEGATE 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 TRADEGATE i.e., TRADEGATE and Ulta Beauty go up and down completely randomly.
Pair Corralation between TRADEGATE and Ulta Beauty
Assuming the 90 days trading horizon TRADEGATE is expected to under-perform the Ulta Beauty. But the stock apears to be less risky and, when comparing its historical volatility, TRADEGATE is 2.33 times less risky than Ulta Beauty. The stock trades about -0.06 of its potential returns per unit of risk. The Ulta Beauty is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 37,400 in Ulta Beauty on September 14, 2024 and sell it today you would earn a total of 3,680 from holding Ulta Beauty or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
TRADEGATE vs. Ulta Beauty
Performance |
| Timeline |
| TRADEGATE |
| Ulta Beauty |
TRADEGATE and Ulta Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRADEGATE and Ulta Beauty
The main advantage of trading using opposite TRADEGATE and Ulta Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEGATE 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.The idea behind TRADEGATE and Ulta Beauty pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ulta Beauty vs. Aedas Homes SA | Ulta Beauty vs. TRADEDOUBLER AB SK | Ulta Beauty vs. TRADEGATE | Ulta Beauty vs. DFS Furniture PLC |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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