Correlation Between Beauty Health and Cowen

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

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

Diversification Opportunities for Beauty Health and Cowen

-0.01

Correlation Coefficient

Beauty Health  Cowen

Good diversification

The 3 months correlation between Beauty and Cowen is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Health Co and Cowen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cowen Group and Beauty Health 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 Beauty Health Co are associated (or correlated) with Cowen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cowen Group has no effect on the direction of Beauty Health i.e., Beauty Health and Cowen go up and down completely randomly.

Pair Corralation between Beauty Health and Cowen

If you would invest  162.00  in Beauty Health Co on September 20, 2024 and sell it today you would lose (1.00) from holding Beauty Health Co or give up 0.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Beauty Health Co  vs.  Cowen Group

Beauty Health

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beauty Health Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Beauty Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Cowen Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cowen Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cowen is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Beauty Health and Cowen

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

The idea behind Beauty Health Co and Cowen Group 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.