Correlation Between Ulta Beauty and Magazine Luiza
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Magazine Luiza 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 Ulta Beauty and Magazine Luiza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Magazine Luiza SA, you can compare the effects of market volatilities on Ulta Beauty and Magazine Luiza 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 Ulta Beauty with a short position of Magazine Luiza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Magazine Luiza.
Diversification Opportunities for Ulta Beauty and Magazine Luiza
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ulta and Magazine is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Magazine Luiza SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magazine Luiza SA and Ulta Beauty 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 Ulta Beauty are associated (or correlated) with Magazine Luiza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magazine Luiza SA has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Magazine Luiza go up and down completely randomly.
Pair Corralation between Ulta Beauty and Magazine Luiza
Assuming the 90 days trading horizon Ulta Beauty is expected to generate 0.65 times more return on investment than Magazine Luiza. However, Ulta Beauty is 1.54 times less risky than Magazine Luiza. It trades about 0.15 of its potential returns per unit of risk. Magazine Luiza SA is currently generating about -0.17 per unit of risk. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ulta Beauty vs. Magazine Luiza SA
Performance |
| Timeline |
| Ulta Beauty |
| Magazine Luiza SA |
Ulta Beauty and Magazine Luiza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ulta Beauty and Magazine Luiza
The main advantage of trading using opposite Ulta Beauty and Magazine Luiza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Magazine Luiza 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 Magazine Luiza will offset losses from the drop in Magazine Luiza's long position.| Ulta Beauty vs. OReilly Automotive | Ulta Beauty vs. AutoZone, | Ulta Beauty vs. Tractor Supply | Ulta Beauty vs. Magazine Luiza SA |
| Magazine Luiza vs. WEG SA | Magazine Luiza vs. Vale SA | Magazine Luiza vs. Itasa Investimentos | Magazine Luiza vs. Ita Unibanco Holding |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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