Correlation Between Commonwealth Bank and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank 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 Commonwealth Bank and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank of and Estee Lauder Companies, you can compare the effects of market volatilities on Commonwealth Bank 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 Commonwealth Bank with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Estee Lauder.
Diversification Opportunities for Commonwealth Bank and Estee Lauder
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commonwealth and Estee is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of 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 Commonwealth Bank 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 Commonwealth Bank of 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 Commonwealth Bank i.e., Commonwealth Bank and Estee Lauder go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Estee Lauder
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 0.24 times more return on investment than Estee Lauder. However, Commonwealth Bank of is 4.24 times less risky than Estee Lauder. It trades about 0.38 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.15 per unit of risk. If you would invest 9,420 in Commonwealth Bank of on August 27, 2024 and sell it today you would earn a total of 960.00 from holding Commonwealth Bank of or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Estee Lauder Companies
Performance |
| Timeline |
| Commonwealth Bank |
| Estee Lauder Companies |
Commonwealth Bank and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Estee Lauder
The main advantage of trading using opposite Commonwealth Bank and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank 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.| Commonwealth Bank vs. Svenska Handelsbanken PK | Commonwealth Bank vs. ANZ Group Holdings | Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. National Australia Bank |
| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Kimberly Clark |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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