Correlation Between Estee Lauder and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Consumer Staples 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 Consumer Staples 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 Consumer Staples Portfolio, you can compare the effects of market volatilities on Estee Lauder and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Consumer Staples.
Diversification Opportunities for Estee Lauder and Consumer Staples
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Estee and Consumer is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Estee Lauder i.e., Estee Lauder and Consumer Staples go up and down completely randomly.
Pair Corralation between Estee Lauder and Consumer Staples
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to generate 4.09 times more return on investment than Consumer Staples. However, Estee Lauder is 4.09 times more volatile than Consumer Staples Portfolio. It trades about 0.1 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.27 per unit of risk. If you would invest 6,861 in Estee Lauder Companies on September 1, 2024 and sell it today you would earn a total of 351.00 from holding Estee Lauder Companies or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Estee Lauder Companies vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Estee Lauder Companies |
| Consumer Staples Por |
Estee Lauder and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Consumer Staples
The main advantage of trading using opposite Estee Lauder and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |