Correlation Between Boomer Holdings and Sally Beauty

Can any of the company-specific risk be diversified away by investing in both Boomer Holdings 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 Boomer Holdings and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Boomer Holdings and Sally Beauty

0.73

Correlation Coefficient

Boomer Holdings  Sally Beauty

Poor diversification

The 3 months correlation between Boomer and Sally is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Boomer 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 Boomer Holdings 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 Boomer 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 Boomer Holdings i.e., Boomer Holdings and Sally Beauty go up and down completely randomly.

Pair Corralation between Boomer Holdings and Sally Beauty

If you would invest  0.04  in Boomer Holdings on February 2, 2024 and sell it today you would earn a total of  0.00  from holding Boomer Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Boomer Holdings  vs.  Sally Beauty Holdings

Boomer Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boomer Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Boomer Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Sally Beauty Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sally Beauty Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Boomer Holdings and Sally Beauty

The main advantage of trading using opposite Boomer Holdings and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boomer Holdings 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.

The idea behind Boomer Holdings and Sally Beauty Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.