Correlation Between Upbound and European Wax
Can any of the company-specific risk be diversified away by investing in both Upbound and European Wax 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 Upbound and European Wax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Upbound Group and European Wax Center, you can compare the effects of market volatilities on Upbound and European Wax 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 Upbound with a short position of European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Upbound and European Wax.
Diversification Opportunities for Upbound and European Wax
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Upbound and European is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Upbound Group and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center and Upbound 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 Upbound Group are associated (or correlated) with European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Upbound i.e., Upbound and European Wax go up and down completely randomly.
Pair Corralation between Upbound and European Wax
Given the investment horizon of 90 days Upbound Group is expected to under-perform the European Wax. But the stock apears to be less risky and, when comparing its historical volatility, Upbound Group is 1.18 times less risky than European Wax. The stock trades about -0.24 of its potential returns per unit of risk. The European Wax Center is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 687.00 in European Wax Center on November 28, 2024 and sell it today you would lose (37.00) from holding European Wax Center or give up 5.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Upbound Group vs. European Wax Center
Performance |
| Timeline |
| Upbound Group |
| European Wax Center |
Upbound and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Upbound and European Wax
The main advantage of trading using opposite Upbound and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Upbound position performs unexpectedly, European Wax 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 European Wax will offset losses from the drop in European Wax's long position.| Upbound vs. JBG SMITH Properties | Upbound vs. Lincoln Electric Holdings | Upbound vs. Toro Co | Upbound vs. Rocky Brands |
| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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