Correlation Between Ulta Beauty and Williams Sonoma
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Williams Sonoma 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 Williams Sonoma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Williams Sonoma, you can compare the effects of market volatilities on Ulta Beauty and Williams Sonoma 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 Williams Sonoma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Williams Sonoma.
Diversification Opportunities for Ulta Beauty and Williams Sonoma
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ulta and Williams is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Williams Sonoma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Sonoma 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 Williams Sonoma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Sonoma has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Williams Sonoma go up and down completely randomly.
Pair Corralation between Ulta Beauty and Williams Sonoma
Given the investment horizon of 90 days Ulta Beauty is expected to under-perform the Williams Sonoma. But the stock apears to be less risky and, when comparing its historical volatility, Ulta Beauty is 3.47 times less risky than Williams Sonoma. The stock trades about -0.24 of its potential returns per unit of risk. The Williams Sonoma is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 13,476 in Williams Sonoma on August 26, 2024 and sell it today you would earn a total of 3,722 from holding Williams Sonoma or generate 27.62% 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. Williams Sonoma
Performance |
| Timeline |
| Ulta Beauty |
| Williams Sonoma |
Ulta Beauty and Williams Sonoma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ulta Beauty and Williams Sonoma
The main advantage of trading using opposite Ulta Beauty and Williams Sonoma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Williams Sonoma 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 Williams Sonoma will offset losses from the drop in Williams Sonoma's long position.| Ulta Beauty vs. Williams Sonoma | Ulta Beauty vs. Dicks Sporting Goods | Ulta Beauty vs. Best Buy Co | Ulta Beauty vs. AutoZone |
| Williams Sonoma vs. AutoZone | Williams Sonoma vs. Ulta Beauty | Williams Sonoma vs. Best Buy Co | Williams Sonoma 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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