Correlation Between Ulta Beauty and 00108WAF7

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Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and 00108WAF7 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 00108WAF7 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and AEP TEX INC, you can compare the effects of market volatilities on Ulta Beauty and 00108WAF7 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 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and 00108WAF7.

Diversification Opportunities for Ulta Beauty and 00108WAF7

Ulta00108WAF7Diversified AwayUlta00108WAF7Diversified Away100%
-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between Ulta and 00108WAF7 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC 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 00108WAF7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and 00108WAF7 go up and down completely randomly.

Pair Corralation between Ulta Beauty and 00108WAF7

Given the investment horizon of 90 days Ulta Beauty is expected to under-perform the 00108WAF7. In addition to that, Ulta Beauty is 1.97 times more volatile than AEP TEX INC. It trades about -0.36 of its total potential returns per unit of risk. AEP TEX INC is currently generating about 0.24 per unit of volatility. If you would invest  7,233  in AEP TEX INC on November 21, 2024 and sell it today you would earn a total of  306.00  from holding AEP TEX INC or generate 4.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.0%
ValuesDaily Returns

Ulta Beauty  vs.  AEP TEX INC

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-5051015
JavaScript chart by amCharts 3.21.15ULTA 00108WAF7
       Timeline  
Ulta Beauty 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Ulta Beauty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Ulta Beauty may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb340360380400420440460
AEP TEX INC 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 00108WAF7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.1528249023717273747576

Ulta Beauty and 00108WAF7 Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.88-2.91-1.93-0.96-0.01620.951.922.883.85 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15ULTA 00108WAF7
       Returns  

Pair Trading with Ulta Beauty and 00108WAF7

The main advantage of trading using opposite Ulta Beauty and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, 00108WAF7 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 00108WAF7 will offset losses from the drop in 00108WAF7's long position.
The idea behind Ulta Beauty and AEP TEX INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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