Correlation Between Ulta Beauty and Allena Pharmaceuticals

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and Allena Pharmaceuticals 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 Ulta Beauty and Allena Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and Allena Pharmaceuticals, you can compare the effects of market volatilities on Ulta Beauty and Allena Pharmaceuticals 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 Ulta Beauty with a short position of Allena Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and Allena Pharmaceuticals.

Diversification Opportunities for Ulta Beauty and Allena Pharmaceuticals

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Ulta Beauty and Allena is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and Allena Pharmaceuticals Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allena Pharmaceuticals and Ulta Beauty 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 Ulta Beauty are associated (or correlated) with Allena Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allena Pharmaceuticals has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and Allena Pharmaceuticals go up and down completely randomly.

Pair Corralation between Ulta Beauty and Allena Pharmaceuticals

Given the investment horizon of 90 days Ulta Beauty is expected to generate 0.23 times more return on investment than Allena Pharmaceuticals. However, Ulta Beauty is 4.38 times less risky than Allena Pharmaceuticals. It trades about 0.06 of its potential returns per unit of risk. Allena Pharmaceuticals is currently generating about -0.06 per unit of risk. If you would invest  27,326  in Ulta Beauty on August 28, 2022 and sell it today you would earn a total of  17,509  from holding Ulta Beauty or generate 64.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy97.79%
ValuesDaily Returns

Ulta Beauty  vs.  Allena Pharmaceuticals Inc

 Performance (%) 
       Timeline  
Ulta Beauty 
Ulta Beauty Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ulta Beauty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Ulta Beauty may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Ulta Beauty Price Channel

Allena Pharmaceuticals 
Allena Performance
0 of 100
Over the last 90 days Allena Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Ulta Beauty and Allena Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ulta Beauty and Allena Pharmaceuticals

The main advantage of trading using opposite Ulta Beauty and Allena Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, Allena Pharmaceuticals 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 Allena Pharmaceuticals will offset losses from the drop in Allena Pharmaceuticals' long position.
Ulta Beauty vs. Aarons Holdings
Ulta Beauty vs. Dollar General Corp
Ulta Beauty vs. Dillards
Ulta Beauty vs. Big Lots
The idea behind Ulta Beauty and Allena Pharmaceuticals 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.
Allena Pharmaceuticals vs. Regeneron Pharmaceuticals
Allena Pharmaceuticals vs. Vertex Pharmaceutic
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

Other Complementary Tools

Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go