Correlation Between Ulta Beauty and Dicks Sporting
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Dicks Sporting 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 Dicks Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Dicks Sporting Goods, you can compare the effects of market volatilities on Ulta Beauty and Dicks Sporting 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 Dicks Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Dicks Sporting.
Diversification Opportunities for Ulta Beauty and Dicks Sporting
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ulta and Dicks is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Dicks Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicks Sporting Goods 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 Dicks Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicks Sporting Goods has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Dicks Sporting go up and down completely randomly.
Pair Corralation between Ulta Beauty and Dicks Sporting
Given the investment horizon of 90 days Ulta Beauty is expected to generate 1.79 times less return on investment than Dicks Sporting. In addition to that, Ulta Beauty is 1.06 times more volatile than Dicks Sporting Goods. It trades about 0.06 of its total potential returns per unit of risk. Dicks Sporting Goods is currently generating about 0.12 per unit of volatility. If you would invest 20,422 in Dicks Sporting Goods on November 1, 2024 and sell it today you would earn a total of 4,137 from holding Dicks Sporting Goods or generate 20.26% 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. Dicks Sporting Goods
Performance |
| Timeline |
| Ulta Beauty |
| Dicks Sporting Goods |
Ulta Beauty and Dicks Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ulta Beauty and Dicks Sporting
The main advantage of trading using opposite Ulta Beauty and Dicks Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Dicks Sporting 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 Dicks Sporting will offset losses from the drop in Dicks Sporting's long position.| Ulta Beauty vs. Williams Sonoma | Ulta Beauty vs. Dicks Sporting Goods | Ulta Beauty vs. Best Buy Co | Ulta Beauty vs. AutoZone |
| Dicks Sporting vs. RH | Dicks Sporting vs. AutoZone | Dicks Sporting vs. Best Buy Co | Dicks Sporting vs. Ulta Beauty |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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