Correlation Between Estee Lauder and Dingdong ADR
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Dingdong ADR 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 Dingdong ADR 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 Dingdong ADR, you can compare the effects of market volatilities on Estee Lauder and Dingdong ADR 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 Dingdong ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Dingdong ADR.
Diversification Opportunities for Estee Lauder and Dingdong ADR
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Estee and Dingdong is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Dingdong ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dingdong ADR 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 Dingdong ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dingdong ADR has no effect on the direction of Estee Lauder i.e., Estee Lauder and Dingdong ADR go up and down completely randomly.
Pair Corralation between Estee Lauder and Dingdong ADR
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Dingdong ADR. But the stock apears to be less risky and, when comparing its historical volatility, Estee Lauder Companies is 2.0 times less risky than Dingdong ADR. The stock trades about -0.07 of its potential returns per unit of risk. The Dingdong ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 490.00 in Dingdong ADR on August 28, 2024 and sell it today you would lose (119.00) from holding Dingdong ADR or give up 24.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Dingdong ADR
Performance |
| Timeline |
| Estee Lauder Companies |
| Dingdong ADR |
Estee Lauder and Dingdong ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Dingdong ADR
The main advantage of trading using opposite Estee Lauder and Dingdong ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Dingdong ADR 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 Dingdong ADR will offset losses from the drop in Dingdong ADR's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Kimberly Clark |
| Dingdong ADR vs. Village Super Market | Dingdong ADR vs. Weis Markets | Dingdong ADR vs. Sendas Distribuidora SA | Dingdong ADR vs. Ingles Markets Incorporated |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |