Correlation Between Ulta Beauty and MetLife
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and MetLife 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 MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and MetLife, you can compare the effects of market volatilities on Ulta Beauty and MetLife 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 MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and MetLife.
Diversification Opportunities for Ulta Beauty and MetLife
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ulta and MetLife is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife 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 MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and MetLife go up and down completely randomly.
Pair Corralation between Ulta Beauty and MetLife
Given the investment horizon of 90 days Ulta Beauty is expected to generate 1.28 times less return on investment than MetLife. In addition to that, Ulta Beauty is 1.28 times more volatile than MetLife. It trades about 0.02 of its total potential returns per unit of risk. MetLife is currently generating about 0.03 per unit of volatility. If you would invest 6,337 in MetLife on January 26, 2024 and sell it today you would earn a total of 935.00 from holding MetLife or generate 14.75% 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. MetLife
Performance |
Timeline |
Ulta Beauty |
MetLife |
Ulta Beauty and MetLife Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ulta Beauty and MetLife
The main advantage of trading using opposite Ulta Beauty and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, MetLife 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 MetLife will offset losses from the drop in MetLife's long position.Ulta Beauty vs. Williams Sonoma | Ulta Beauty vs. AutoZone | Ulta Beauty vs. Best Buy Co | Ulta Beauty vs. RH |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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