Correlation Between Sally Beauty and Spectrum Brands
Can any of the company-specific risk be diversified away by investing in both Sally Beauty and Spectrum Brands 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 Sally Beauty and Spectrum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sally Beauty Holdings and Spectrum Brands Holdings, you can compare the effects of market volatilities on Sally Beauty and Spectrum Brands 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 Sally Beauty with a short position of Spectrum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sally Beauty and Spectrum Brands.
Diversification Opportunities for Sally Beauty and Spectrum Brands
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sally and Spectrum is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sally Beauty Holdings and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings and Sally 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 Sally Beauty Holdings are associated (or correlated) with Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Sally Beauty i.e., Sally Beauty and Spectrum Brands go up and down completely randomly.
Pair Corralation between Sally Beauty and Spectrum Brands
Considering the 90-day investment horizon Sally Beauty Holdings is expected to under-perform the Spectrum Brands. In addition to that, Sally Beauty is 2.21 times more volatile than Spectrum Brands Holdings. It trades about -0.22 of its total potential returns per unit of risk. Spectrum Brands Holdings is currently generating about -0.24 per unit of volatility. If you would invest 8,535 in Spectrum Brands Holdings on January 20, 2024 and sell it today you would lose (625.00) from holding Spectrum Brands Holdings or give up 7.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sally Beauty Holdings vs. Spectrum Brands Holdings
Performance |
| Timeline |
| Sally Beauty Holdings |
| Spectrum Brands Holdings |
Sally Beauty and Spectrum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sally Beauty and Spectrum Brands
The main advantage of trading using opposite Sally Beauty and Spectrum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sally Beauty position performs unexpectedly, Spectrum Brands 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 Spectrum Brands will offset losses from the drop in Spectrum Brands' long position.| Sally Beauty vs. OReilly Automotive | Sally Beauty vs. AutoZone | Sally Beauty vs. Genuine Parts Co | Sally Beauty vs. Williams Sonoma |
| Spectrum Brands vs. Unilever PLC ADR | Spectrum Brands vs. Estee Lauder Companies | Spectrum Brands vs. ELF Beauty | Spectrum Brands vs. Coty Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |