Correlation Between Williams Sonoma and Ulta Beauty
Can any of the company-specific risk be diversified away by investing in both Williams Sonoma and Ulta 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 Williams Sonoma and Ulta Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Williams Sonoma and Ulta Beauty, you can compare the effects of market volatilities on Williams Sonoma and Ulta 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 Williams Sonoma with a short position of Ulta Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Williams Sonoma and Ulta Beauty.
Diversification Opportunities for Williams Sonoma and Ulta Beauty
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Williams and Ulta is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Williams Sonoma and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty and Williams Sonoma 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 Williams Sonoma are associated (or correlated) with Ulta Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ulta Beauty has no effect on the direction of Williams Sonoma i.e., Williams Sonoma and Ulta Beauty go up and down completely randomly.
Pair Corralation between Williams Sonoma and Ulta Beauty
Considering the 90-day investment horizon Williams Sonoma is expected to generate 1.7 times more return on investment than Ulta Beauty. However, Williams Sonoma is 1.7 times more volatile than Ulta Beauty. It trades about 0.14 of its potential returns per unit of risk. Ulta Beauty is currently generating about 0.06 per unit of risk. If you would invest 15,000 in Williams Sonoma on October 31, 2024 and sell it today you would earn a total of 6,670 from holding Williams Sonoma or generate 44.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Williams Sonoma vs. Ulta Beauty
Performance |
| Timeline |
| Williams Sonoma |
| Ulta Beauty |
Williams Sonoma and Ulta Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Williams Sonoma and Ulta Beauty
The main advantage of trading using opposite Williams Sonoma and Ulta Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Williams Sonoma position performs unexpectedly, Ulta 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 Ulta Beauty will offset losses from the drop in Ulta Beauty's long position.| Williams Sonoma vs. AutoZone | Williams Sonoma vs. Ulta Beauty | Williams Sonoma vs. Best Buy Co | Williams Sonoma vs. RH |
| Ulta Beauty vs. Williams Sonoma | Ulta Beauty vs. Dicks Sporting Goods | Ulta Beauty vs. Best Buy Co | Ulta Beauty vs. AutoZone |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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