Correlation Between ChargePoint Holdings and Sally Beauty

Can any of the company-specific risk be diversified away by investing in both ChargePoint 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 ChargePoint 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 ChargePoint Holdings and Sally Beauty Holdings, you can compare the effects of market volatilities on ChargePoint 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 ChargePoint Holdings with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChargePoint Holdings and Sally Beauty.

Diversification Opportunities for ChargePoint Holdings and Sally Beauty

-0.13

Correlation Coefficient

ChargePoint Holdings  Sally Beauty

Good diversification

The 3 months correlation between ChargePoint and Sally is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding ChargePoint 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 ChargePoint 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 ChargePoint 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 ChargePoint Holdings i.e., ChargePoint Holdings and Sally Beauty go up and down completely randomly.

Pair Corralation between ChargePoint Holdings and Sally Beauty

Given the investment horizon of 90 days ChargePoint Holdings is expected to generate 1.04 times less return on investment than Sally Beauty. In addition to that, ChargePoint Holdings is 1.64 times more volatile than Sally Beauty Holdings. It trades about 0.01 of its total potential returns per unit of risk. Sally Beauty Holdings is currently generating about 0.02 per unit of volatility. If you would invest  1,250  in Sally Beauty Holdings on September 12, 2024 and sell it today you would earn a total of  25.00  from holding Sally Beauty Holdings or generate 2.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ChargePoint Holdings  vs.  Sally Beauty Holdings

ChargePoint Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ChargePoint Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ChargePoint Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sally Beauty Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sally Beauty Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Sally Beauty is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ChargePoint Holdings and Sally Beauty

The main advantage of trading using opposite ChargePoint Holdings and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChargePoint 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 ChargePoint 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.