Correlation Between Global X and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and Sally Beauty Holdings, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Sally Beauty.
Diversification Opportunities for Global X and Sally Beauty
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Sally is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds 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 Global X 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 Global X Funds 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 Global X i.e., Global X and Sally Beauty go up and down completely randomly.
Pair Corralation between Global X and Sally Beauty
Given the investment horizon of 90 days Global X Funds is expected to generate 0.3 times more return on investment than Sally Beauty. However, Global X Funds is 3.33 times less risky than Sally Beauty. It trades about -0.05 of its potential returns per unit of risk. Sally Beauty Holdings is currently generating about -0.09 per unit of risk. If you would invest 3,306 in Global X Funds on January 26, 2024 and sell it today you would lose (32.00) from holding Global X Funds or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Funds vs. Sally Beauty Holdings
Performance |
| Timeline |
| Global X Funds |
| Sally Beauty Holdings |
Global X and Sally Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Sally Beauty
The main advantage of trading using opposite Global X and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. Vanguard Total Stock | Global X vs. SPDR SP 500 | Global X vs. iShares Core SP | Global X vs. Vanguard Total Bond |
| Sally Beauty vs. Target | Sally Beauty vs. Lowes Companies | Sally Beauty vs. Kohls Corp | Sally Beauty vs. Gap 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.
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