Correlation Between Clorox and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Clorox and Estee Lauder 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 Clorox and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Clorox and Estee Lauder Companies, you can compare the effects of market volatilities on Clorox and Estee Lauder 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 Clorox with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clorox and Estee Lauder.
Diversification Opportunities for Clorox and Estee Lauder
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clorox and Estee is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Clorox and Estee Lauder Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estee Lauder Companies and Clorox 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 The Clorox are associated (or correlated) with Estee Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estee Lauder Companies has no effect on the direction of Clorox i.e., Clorox and Estee Lauder go up and down completely randomly.
Pair Corralation between Clorox and Estee Lauder
Considering the 90-day investment horizon The Clorox is expected to under-perform the Estee Lauder. But the stock apears to be less risky and, when comparing its historical volatility, The Clorox is 1.34 times less risky than Estee Lauder. The stock trades about -0.01 of its potential returns per unit of risk. The Estee Lauder Companies is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 7,498 in Estee Lauder Companies on November 1, 2024 and sell it today you would earn a total of 1,004 from holding Estee Lauder Companies or generate 13.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Clorox vs. Estee Lauder Companies
Performance |
| Timeline |
| Clorox |
| Estee Lauder Companies |
Clorox and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clorox and Estee Lauder
The main advantage of trading using opposite Clorox and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clorox position performs unexpectedly, Estee Lauder 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 Estee Lauder will offset losses from the drop in Estee Lauder's long position.| Clorox vs. Colgate Palmolive | Clorox vs. Procter Gamble | Clorox vs. Unilever PLC ADR | Clorox vs. Church Dwight |
| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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