Consumer Cyclical ยท Specialty Retail ยท Completed evidence
ULTA relative to SBH
Ulta Beauty Inc is the relatively depressed leg. Sally Beauty Holdings Inc is the relatively extended leg.
Specific pair strategy
What is the play in ULTA / SBH?
This is a relative trade. The result depends on which security performs better, not on whether the whole market rises or falls.
Watchlist pair - not triggered
Possible future structure: long ULTA / short SBH
The proposed pair would look for ULTA to outperform SBH, but the current evidence does not yet justify treating the gap as a convergence trade.
This is the relatively depressed leg. The case needs it to recover or at least hold up better than the other leg.
This is the relatively extended leg. The case needs it to lag or weaken relative to the long leg.
A favourable relative move means ULTA rises more than SBH, falls less than SBH, or rises while SBH falls. If SBH outperforms ULTA, the pair moves against the case.
Wait for a completed daily turn toward normal and fresh evidence that ULTA is improving relative to SBH. The size of the gap alone is not the trigger.
If the daily gap keeps widening, leave the pair alone rather than averaging into the separation.
Do not use the pair if the completed gap keeps widening, ULTA continues to weaken relative to SBH, or the relationship moves into a break state.
Treat this as a watch condition until the spread turns and at least one leg develops confirming evidence.
Evidence now
- ULTA Market Dynamics is improving.
What would invalidate it?
A large z-score alone is not a reason to expect mean reversion; the separation may reflect new information.
Possible setup paths
How the relative-value idea could be expressed
These are research structures, not recommendations or position-size instructions. The current course above determines whether any structure is ready to study now.
Long ULTA / short SBH
Treat both legs as one relative position. The setup looks for ULTA to outperform SBH; ULTA can rise faster, fall less, or rise while SBH falls. The pair loses ground when SBH outperforms ULTA.
When it becomes relevantThis is a structure to study only after the current course changes from โWatch, do not assume convergenceโ to confirmed convergence. Wait for the daily gap to narrow and for ULTA to improve or SBH to lose support.Principal riskRequires a live review of both legs, borrow availability and cost, event dates, liquidity and the research normalisation.Study ULTA alone if its own evidence confirms
This simpler expression focuses on recovery in ULTA. It avoids short-borrow mechanics, but it no longer isolates relative value: the result is exposed to the broad market, the sector and ULTA-specific news.
When it becomes relevantA stronger case needs improving ULTA price structure and supporting evidence, not just a wide relationship gap.Principal riskCarries full single-security and broad-market direction risk.Study SBH alone if its support continues to weaken
This expression focuses on weakness in SBH. It may fit a leader-rollover case, but it also abandons the relative hedge and adds direct market direction, squeeze and company-event risk.
When it becomes relevantWeakening in SBH must be visible in its own completed evidence; relative extension alone is not enough.Principal riskShort selling can involve unlimited loss, borrow fees, recalls and forced close-outs.Any practical expression needs an independent review of suitability, portfolio risk, liquidity, current news and earnings, borrow availability and cost, transaction costs and tax.
Relationship gap ยท technical name: standardised residual
How far apart are they compared with normal?
Zero is the pair's historical centre. The outer guides show increasingly unusual departures from it.
This is the relationship gap after allowing for the pair's usual co-movement. Zero is its historical centre; the distance is measured in standard deviations, so different pairs can be compared on the same scale.
The latest gap is 1.54 standard deviations from normal. ULTA is the relatively depressed leg and SBH is the relatively extended leg. That is unusual separation, not proof that either security is cheap or expensive.
A move toward zero means convergence. A move farther from zero means the separation is extending and raises the risk that the old relationship is changing.
Common-base price paths
Which security created the gap?
Both paths begin at 100 so their relative movement is visible without mixing different share prices.
Both securities are reset to 100 at the first date. This removes the distraction of different share prices and shows how their completed weekly price paths diverged. It is not a valuation chart.
Since the common starting point, SBH is +68.4% and ULTA is +25.4%. The chart shows which price path contributed to the separation; the fitted relationship measure is more precise than the raw visual distance.
For convergence, watch for ULTA to catch up, SBH to lose ground, or both. The relationship can close even if both securities rise or both fall.
SBHULTA
Completed daily timing
Is the gap closing yet?
The daily relationship adds timing context inside the slower weekly case. It does not replace the weekly validity checks.
This applies the same relationship to completed daily bars. It is the timing layer inside the weekly case, not a separate trading signal.
Gap narrowing: The completed daily gap is narrowing. That supports the weekly convergence case, although it still needs to persist.
Further movement toward zero would strengthen confirmation; a turn away from zero would weaken it.
ULTA ยท Ulta Beauty Inc
18/100 evidence score- Market Dynamics
- 0.211 ยท change 0.861
- Trend
- Negative
- Stage
- Stage 4 ยท Declining
- Smart Money
- Neutral
- News sentiment
- Positive
- Options
- Bearish
SBH ยท Sally Beauty Holdings Inc
55/100 evidence score- Market Dynamics
- 0.821 ยท change 0.22
- Trend
- Positive
- Stage
- Stage 2 ยท Advancing
- Smart Money
- Cautious
- Short interest
- Crowded
- Options
- Mixed
Relationship diagnostics
Why this pair is on the map
How closely completed weekly returns moved together across the measurement window.
How consistent the fitted relationship remained across earlier and later parts of the sample.
An observed mean-reversion clock, not a deadline or a forecast.
How often the residual crossed its historical centre; repeated crossings matter more than a single fit.
The latest residual's location inside its own completed history.
Stored price, volume and size context only. It does not include a live short locate or cost.
0 of 2 non-overlapping historical separations resolved after the relationship was fitted on earlier data.
Median time to return near the earlier fitted centre among the held-out cases that resolved.
The largest further move recorded after a measured held-out separation, before resolution or the observation window ended.
State history
What changed and when
Daily timing changed
Completed daily timing changed to gap narrowing through 2026-08-20.
Daily timing changed
Completed daily timing changed to gap extending through 2026-08-19.
Daily timing changed
Completed daily timing changed to gap narrowing through 2026-08-18.
Daily timing changed
Completed daily timing changed to gap extending through 2026-08-17.
Relationship discovered
Published as Unconfirmed stretch after the completed 2026-08-14 observation.
Same-industry map