Correlation Between Ulta Beauty and Take Two
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Take Two 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 Take Two into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Take Two Interactive Software, you can compare the effects of market volatilities on Ulta Beauty and Take Two 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 Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Take Two.
Diversification Opportunities for Ulta Beauty and Take Two
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ulta and Take is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Take Two go up and down completely randomly.
Pair Corralation between Ulta Beauty and Take Two
Assuming the 90 days trading horizon Ulta Beauty is expected to generate 1.37 times less return on investment than Take Two. In addition to that, Ulta Beauty is 1.21 times more volatile than Take Two Interactive Software. It trades about 0.08 of its total potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.13 per unit of volatility. If you would invest 21,812 in Take Two Interactive Software on November 2, 2024 and sell it today you would earn a total of 6,074 from holding Take Two Interactive Software or generate 27.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ulta Beauty vs. Take Two Interactive Software
Performance |
| Timeline |
| Ulta Beauty |
| Take Two Interactive |
Ulta Beauty and Take Two Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ulta Beauty and Take Two
The main advantage of trading using opposite Ulta Beauty and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Take Two 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 Take Two will offset losses from the drop in Take Two's long position.| Ulta Beauty vs. DXC Technology | Ulta Beauty vs. Academy Sports and | Ulta Beauty vs. United Natural Foods, | Ulta Beauty vs. Brpr Corporate Offices |
| Take Two vs. Micron Technology | Take Two vs. MAHLE Metal Leve | Take Two vs. STAG Industrial, | Take Two vs. Academy Sports and |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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