Correlation Between Ulta Beauty and Dixons Carphone
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Dixons Carphone 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 Dixons Carphone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Dixons Carphone plc, you can compare the effects of market volatilities on Ulta Beauty and Dixons Carphone 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 Dixons Carphone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Dixons Carphone.
Diversification Opportunities for Ulta Beauty and Dixons Carphone
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ulta and Dixons is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc 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 Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Dixons Carphone go up and down completely randomly.
Pair Corralation between Ulta Beauty and Dixons Carphone
Given the investment horizon of 90 days Ulta Beauty is expected to under-perform the Dixons Carphone. But the stock apears to be less risky and, when comparing its historical volatility, Ulta Beauty is 1.66 times less risky than Dixons Carphone. The stock trades about 0.0 of its potential returns per unit of risk. The Dixons Carphone plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Dixons Carphone plc on August 31, 2024 and sell it today you would earn a total of 33.00 from holding Dixons Carphone plc or generate 50.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Ulta Beauty vs. Dixons Carphone plc
Performance |
| Timeline |
| Ulta Beauty |
| Dixons Carphone plc |
Ulta Beauty and Dixons Carphone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ulta Beauty and Dixons Carphone
The main advantage of trading using opposite Ulta Beauty and Dixons Carphone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Dixons Carphone 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 Dixons Carphone will offset losses from the drop in Dixons Carphone's long position.| Ulta Beauty vs. Target | Ulta Beauty vs. Lowes Companies | Ulta Beauty vs. Kohls Corp | Ulta Beauty vs. Walmart |
| Dixons Carphone vs. Ulta Beauty | Dixons Carphone vs. Williams Sonoma | Dixons Carphone vs. Dicks Sporting Goods | Dixons Carphone vs. Best Buy Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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