Correlation Between Ulta Beauty and AutoZone
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and AutoZone 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 AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and AutoZone, you can compare the effects of market volatilities on Ulta Beauty and AutoZone 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 AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and AutoZone.
Diversification Opportunities for Ulta Beauty and AutoZone
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ulta and AutoZone is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone 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 AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and AutoZone go up and down completely randomly.
Pair Corralation between Ulta Beauty and AutoZone
Given the investment horizon of 90 days Ulta Beauty is expected to under-perform the AutoZone. In addition to that, Ulta Beauty is 1.42 times more volatile than AutoZone. It trades about -0.02 of its total potential returns per unit of risk. AutoZone is currently generating about 0.03 per unit of volatility. If you would invest 257,159 in AutoZone on August 23, 2024 and sell it today you would earn a total of 47,799 from holding AutoZone or generate 18.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ulta Beauty vs. AutoZone
Performance |
| Timeline |
| Ulta Beauty |
| AutoZone |
Ulta Beauty and AutoZone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ulta Beauty and AutoZone
The main advantage of trading using opposite Ulta Beauty and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, AutoZone 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 AutoZone will offset losses from the drop in AutoZone's long position.| Ulta Beauty vs. Williams Sonoma | Ulta Beauty vs. Dicks Sporting Goods | Ulta Beauty vs. Best Buy Co | Ulta Beauty vs. AutoZone |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |