Correlation Between Ulta Beauty and Western Capital
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Western Capital 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 Western Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Western Capital Resources, you can compare the effects of market volatilities on Ulta Beauty and Western Capital 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 Western Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Western Capital.
Diversification Opportunities for Ulta Beauty and Western Capital
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ulta and Western is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Western Capital Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Capital Resources 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 Western Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Capital Resources has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Western Capital go up and down completely randomly.
Pair Corralation between Ulta Beauty and Western Capital
Given the investment horizon of 90 days Ulta Beauty is expected to generate 3.83 times less return on investment than Western Capital. But when comparing it to its historical volatility, Ulta Beauty is 1.83 times less risky than Western Capital. It trades about 0.05 of its potential returns per unit of risk. Western Capital Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 775.00 in Western Capital Resources on August 31, 2024 and sell it today you would earn a total of 153.00 from holding Western Capital Resources or generate 19.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ulta Beauty vs. Western Capital Resources
Performance |
| Timeline |
| Ulta Beauty |
| Western Capital Resources |
Ulta Beauty and Western Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ulta Beauty and Western Capital
The main advantage of trading using opposite Ulta Beauty and Western Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Western Capital 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 Western Capital will offset losses from the drop in Western Capital's long position.| Ulta Beauty vs. Target | Ulta Beauty vs. Lowes Companies | Ulta Beauty vs. Kohls Corp | Ulta Beauty vs. Walmart |
| Western Capital vs. Evgo Inc | Western Capital vs. Ulta Beauty | Western Capital vs. Best Buy Co | Western Capital 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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