Correlation Between Estee Lauder and Berkeley
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Berkeley 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 Estee Lauder and Berkeley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Estee Lauder Companies and The Berkeley Group, you can compare the effects of market volatilities on Estee Lauder and Berkeley 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 Estee Lauder with a short position of Berkeley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Berkeley.
Diversification Opportunities for Estee Lauder and Berkeley
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Estee and Berkeley is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and The Berkeley Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Group and Estee Lauder 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 Estee Lauder Companies are associated (or correlated) with Berkeley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Group has no effect on the direction of Estee Lauder i.e., Estee Lauder and Berkeley go up and down completely randomly.
Pair Corralation between Estee Lauder and Berkeley
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Berkeley. In addition to that, Estee Lauder is 1.54 times more volatile than The Berkeley Group. It trades about -0.08 of its total potential returns per unit of risk. The Berkeley Group is currently generating about 0.04 per unit of volatility. If you would invest 5,292 in The Berkeley Group on September 1, 2024 and sell it today you would earn a total of 822.00 from holding The Berkeley Group or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 55.82% |
| Values | Daily Returns |
Estee Lauder Companies vs. The Berkeley Group
Performance |
| Timeline |
| Estee Lauder Companies |
| Berkeley Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Estee Lauder and Berkeley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Berkeley
The main advantage of trading using opposite Estee Lauder and Berkeley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Berkeley 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 Berkeley will offset losses from the drop in Berkeley's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| Berkeley vs. Summit Environmental | Berkeley vs. Merit Medical Systems | Berkeley vs. Sonida Senior Living | Berkeley vs. Cumberland Pharmaceuticals |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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