Correlation Between Sally Beauty and Rite Aid

By analyzing existing cross correlation between Sally Beauty Holdings and Rite Aid you can compare the effects of market volatilities on Sally Beauty and Rite Aid 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 Rite Aid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sally Beauty and Rite Aid.

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Can any of the company-specific risk be diversified away by investing in both Sally Beauty and Rite Aid at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing Sally Beauty and Rite Aid into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for Sally Beauty and Rite Aid

0.07
Correlation
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Significant diversification

The 3 months correlation between Sally and Rite Aid is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sally Beauty Holdings Inc Na and Rite Aid Corp. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Rite Aid 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 Rite Aid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rite Aid has no effect on the direction of Sally Beauty i.e. Sally Beauty and Rite Aid go up and down completely randomly.

Pair Corralation between Sally Beauty and Rite Aid

Considering 30-days investment horizon, Sally Beauty Holdings is expected to generate 0.82 times more return on investment than Rite Aid. However, Sally Beauty Holdings is 1.22 times less risky than Rite Aid. It trades about 0.1 of its potential returns per unit of risk. Rite Aid is currently generating about 0.03 per unit of risk. If you would invest  1,183  in Sally Beauty Holdings on May 7, 2020 and sell it today you would earn a total of  381.00  from holding Sally Beauty Holdings or generate 32.21% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sally Beauty Holdings Inc Na  vs.  Rite Aid Corp.

 Performance (%) 
      Timeline 
Sally Beauty Holdings 
66

Sally Beauty Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Sally Beauty Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 30 days. Despite nearly weak fundamental indicators, Sally Beauty layed out solid returns over the last few months and may actually be approaching a breakup point.
Rite Aid 
22

Rite Aid Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Rite Aid are ranked lower than 2 (%) of all global equities and portfolios over the last 30 days. In spite of rather weak fundamental drivers, Rite Aid exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sally Beauty and Rite Aid Volatility Contrast

 Predicted Return Density 
      Returns 
Check out your portfolio center. Please also try Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.


 
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