Correlation Between Revolution Beauty and Henderson High

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

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

Diversification Opportunities for Revolution Beauty and Henderson High

0.7

Correlation Coefficient

Revolution Beauty  Henderson High

Poor diversification

The 3 months correlation between Revolution and Henderson is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Beauty Group and Henderson High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson High Income and Revolution 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 Revolution Beauty Group are associated (or correlated) with Henderson High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson High Income has no effect on the direction of Revolution Beauty i.e., Revolution Beauty and Henderson High go up and down completely randomly.

Pair Corralation between Revolution Beauty and Henderson High

If you would invest  0.00  in Henderson High Income on August 30, 2024 and sell it today you would earn a total of  0.00  from holding Henderson High Income 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

Revolution Beauty Group  vs.  Henderson High Income

Revolution Beauty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revolution Beauty Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Henderson High Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henderson High Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Henderson High is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Revolution Beauty and Henderson High

The main advantage of trading using opposite Revolution Beauty and Henderson High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revolution Beauty position performs unexpectedly, Henderson High 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 Henderson High will offset losses from the drop in Henderson High's long position.

The idea behind Revolution Beauty Group and Henderson High Income 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..