Correlation Between Maxi Renda and Ulta Beauty

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

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

Diversification Opportunities for Maxi Renda and Ulta Beauty

-0.5

Correlation Coefficient

Maxi Renda  Ulta Beauty

Very good diversification

The 3 months correlation between Maxi and Ulta is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Maxi Renda Fundo and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty and Maxi Renda 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 Maxi Renda Fundo are associated (or correlated) with Ulta Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ulta Beauty has no effect on the direction of Maxi Renda i.e., Maxi Renda and Ulta Beauty go up and down completely randomly.

Pair Corralation between Maxi Renda and Ulta Beauty

Assuming the 90 days trading horizon Maxi Renda Fundo is expected to under-perform the Ulta Beauty. But the fund apears to be less risky and, when comparing its historical volatility, Maxi Renda Fundo is 2.24 times less risky than Ulta Beauty. The fund trades about -0.1 of its potential returns per unit of risk. The Ulta Beauty is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,967  in Ulta Beauty on September 18, 2024 and sell it today you would earn a total of  2,013  from holding Ulta Beauty or generate 18.36% return on investment over 90 days.

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

Maxi Renda Fundo  vs.  Ulta Beauty

Maxi Renda Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maxi Renda Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Ulta Beauty

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ulta Beauty are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Ulta Beauty sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maxi Renda and Ulta Beauty

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

The idea behind Maxi Renda Fundo and Ulta Beauty 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.