Correlation Between Visa and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both Visa and Sally Beauty 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 Visa and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Sally Beauty Holdings, you can compare the effects of market volatilities on Visa and Sally Beauty 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 Visa with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sally Beauty.
Diversification Opportunities for Visa and Sally Beauty
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Sally is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sally Beauty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sally Beauty Holdings and Visa 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 Visa Class A are associated (or correlated) with Sally Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sally Beauty Holdings has no effect on the direction of Visa i.e., Visa and Sally Beauty go up and down completely randomly.
Pair Corralation between Visa and Sally Beauty
Taking into account the 90-day investment horizon Visa is expected to generate 1.96 times less return on investment than Sally Beauty. But when comparing it to its historical volatility, Visa Class A is 2.97 times less risky than Sally Beauty. It trades about 0.08 of its potential returns per unit of risk. Sally Beauty Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 967.00 in Sally Beauty Holdings on August 26, 2024 and sell it today you would earn a total of 330.00 from holding Sally Beauty Holdings or generate 34.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Sally Beauty Holdings
Performance |
| Timeline |
| Visa Class A |
| Sally Beauty Holdings |
Visa and Sally Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sally Beauty
The main advantage of trading using opposite Visa and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sally Beauty 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 Sally Beauty will offset losses from the drop in Sally Beauty's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Sally Beauty vs. Oriental Culture Holding | Sally Beauty vs. Hour Loop | Sally Beauty vs. Qurate Retail Series | Sally Beauty vs. Emerge Commerce |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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