Correlation Between Ulta Beauty and Parkland
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Parkland 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 Parkland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Parkland, you can compare the effects of market volatilities on Ulta Beauty and Parkland 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 Parkland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Parkland.
Diversification Opportunities for Ulta Beauty and Parkland
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ulta and Parkland is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Parkland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkland 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 Parkland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkland has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Parkland go up and down completely randomly.
Pair Corralation between Ulta Beauty and Parkland
Given the investment horizon of 90 days Ulta Beauty is expected to under-perform the Parkland. In addition to that, Ulta Beauty is 1.41 times more volatile than Parkland. It trades about -0.08 of its total potential returns per unit of risk. Parkland is currently generating about 0.0 per unit of volatility. If you would invest 2,473 in Parkland on August 28, 2024 and sell it today you would lose (5.00) from holding Parkland or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ulta Beauty vs. Parkland
Performance |
| Timeline |
| Ulta Beauty |
| Parkland |
Ulta Beauty and Parkland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ulta Beauty and Parkland
The main advantage of trading using opposite Ulta Beauty and Parkland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Parkland 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 Parkland will offset losses from the drop in Parkland's long position.| Ulta Beauty vs. Williams Sonoma | Ulta Beauty vs. Dicks Sporting Goods | Ulta Beauty vs. Best Buy Co | Ulta Beauty vs. AutoZone |
| Parkland vs. Meso Numismatics | Parkland vs. Tandy Leather Factory | Parkland vs. EVgo Equity Warrants | Parkland vs. Sally Beauty Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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