Correlation Between Spectrum Brands and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both Spectrum Brands 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 Spectrum Brands and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Brands Holdings and Sally Beauty Holdings, you can compare the effects of market volatilities on Spectrum Brands 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 Spectrum Brands with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Sally Beauty.
Diversification Opportunities for Spectrum Brands and Sally Beauty
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spectrum and Sally is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings 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 Spectrum Brands 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 Spectrum Brands Holdings 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 Spectrum Brands i.e., Spectrum Brands and Sally Beauty go up and down completely randomly.
Pair Corralation between Spectrum Brands and Sally Beauty
Considering the 90-day investment horizon Spectrum Brands Holdings is expected to generate 0.35 times more return on investment than Sally Beauty. However, Spectrum Brands Holdings is 2.85 times less risky than Sally Beauty. It trades about 0.39 of its potential returns per unit of risk. Sally Beauty Holdings is currently generating about -0.07 per unit of risk. If you would invest 8,048 in Spectrum Brands Holdings on December 29, 2023 and sell it today you would earn a total of 843.00 from holding Spectrum Brands Holdings or generate 10.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Spectrum Brands Holdings vs. Sally Beauty Holdings
Performance |
Timeline |
Spectrum Brands Holdings |
Sally Beauty Holdings |
Spectrum Brands and Sally Beauty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spectrum Brands and Sally Beauty
The main advantage of trading using opposite Spectrum Brands and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands 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.Spectrum Brands vs. Estee Lauder Companies | Spectrum Brands vs. United Guardian | Spectrum Brands vs. Unilever PLC ADR | Spectrum Brands vs. Veru Inc |
Sally Beauty vs. Macys Inc | Sally Beauty vs. Wayfair | Sally Beauty vs. 1StdibsCom | Sally Beauty vs. AutoNation |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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