Correlation Between Eversource Energy and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both Eversource Energy 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 Eversource Energy and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eversource Energy and Sally Beauty Holdings, you can compare the effects of market volatilities on Eversource Energy 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 Eversource Energy with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversource Energy and Sally Beauty.
Diversification Opportunities for Eversource Energy and Sally Beauty
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eversource and Sally is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy 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 Eversource Energy 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 Eversource Energy 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 Eversource Energy i.e., Eversource Energy and Sally Beauty go up and down completely randomly.
Pair Corralation between Eversource Energy and Sally Beauty
Allowing for the 90-day total investment horizon Eversource Energy is expected to generate 0.46 times more return on investment than Sally Beauty. However, Eversource Energy is 2.17 times less risky than Sally Beauty. It trades about 0.1 of its potential returns per unit of risk. Sally Beauty Holdings is currently generating about 0.01 per unit of risk. If you would invest 5,789 in Eversource Energy on December 30, 2023 and sell it today you would earn a total of 188.00 from holding Eversource Energy or generate 3.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Eversource Energy vs. Sally Beauty Holdings
Performance |
Timeline |
Eversource Energy |
Sally Beauty Holdings |
Eversource Energy and Sally Beauty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eversource Energy and Sally Beauty
The main advantage of trading using opposite Eversource Energy and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eversource Energy 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.Eversource Energy vs. Hanover Foods | Eversource Energy vs. Hf Foods Group | Eversource Energy vs. Hudson Technologies | Eversource Energy vs. AMCON Distributing |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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