Correlation Between Ulta Beauty and Haverty Furniture
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Haverty Furniture 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 Haverty Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Haverty Furniture Companies, you can compare the effects of market volatilities on Ulta Beauty and Haverty Furniture 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 Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Haverty Furniture.
Diversification Opportunities for Ulta Beauty and Haverty Furniture
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ulta and Haverty is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture 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 Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Haverty Furniture go up and down completely randomly.
Pair Corralation between Ulta Beauty and Haverty Furniture
Given the investment horizon of 90 days Ulta Beauty is expected to generate 0.89 times more return on investment than Haverty Furniture. However, Ulta Beauty is 1.13 times less risky than Haverty Furniture. It trades about -0.03 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about -0.03 per unit of risk. If you would invest 42,599 in Ulta Beauty on August 26, 2024 and sell it today you would lose (8,761) from holding Ulta Beauty or give up 20.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ulta Beauty vs. Haverty Furniture Companies
Performance |
| Timeline |
| Ulta Beauty |
| Haverty Furniture |
Ulta Beauty and Haverty Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ulta Beauty and Haverty Furniture
The main advantage of trading using opposite Ulta Beauty and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Haverty Furniture 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 Haverty Furniture will offset losses from the drop in Haverty Furniture's long position.| Ulta Beauty vs. Williams Sonoma | Ulta Beauty vs. Dicks Sporting Goods | Ulta Beauty vs. Best Buy Co | Ulta Beauty vs. AutoZone |
| Haverty Furniture vs. AutoZone | Haverty Furniture vs. Ulta Beauty | Haverty Furniture vs. Best Buy Co | Haverty Furniture vs. RH |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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