Correlation Between SVB Financial and Ulta Beauty

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

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

Diversification Opportunities for SVB Financial and Ulta Beauty

0.0

Correlation Coefficient

SVB Financial  Ulta Beauty

Pay attention - limited upside

The 3 months correlation between SVB and Ulta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SVB Financial Group and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty and SVB Financial 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 SVB Financial Group 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 SVB Financial i.e., SVB Financial and Ulta Beauty go up and down completely randomly.

Pair Corralation between SVB Financial and Ulta Beauty

If you would invest  11,080  in Ulta Beauty on September 28, 2024 and sell it today you would earn a total of  2,610  from holding Ulta Beauty or generate 23.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

SVB Financial Group  vs.  Ulta Beauty

SVB Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, SVB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ulta Beauty

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ulta Beauty are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Ulta Beauty sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SVB Financial and Ulta Beauty

The main advantage of trading using opposite SVB Financial and Ulta Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SVB Financial 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 SVB Financial Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.