Correlation Between Estee Lauder and Fresh Del
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Fresh Del 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 Fresh Del 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 Fresh Del Monte, you can compare the effects of market volatilities on Estee Lauder and Fresh Del 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 Fresh Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Fresh Del.
Diversification Opportunities for Estee Lauder and Fresh Del
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Estee and Fresh is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Fresh Del Monte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Del Monte 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 Fresh Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Del Monte has no effect on the direction of Estee Lauder i.e., Estee Lauder and Fresh Del go up and down completely randomly.
Pair Corralation between Estee Lauder and Fresh Del
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Fresh Del. In addition to that, Estee Lauder is 3.94 times more volatile than Fresh Del Monte. It trades about -0.11 of its total potential returns per unit of risk. Fresh Del Monte is currently generating about -0.2 per unit of volatility. If you would invest 3,169 in Fresh Del Monte on November 28, 2024 and sell it today you would lose (155.00) from holding Fresh Del Monte or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Fresh Del Monte
Performance |
| Timeline |
| Estee Lauder Companies |
| Fresh Del Monte |
Estee Lauder and Fresh Del Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Fresh Del
The main advantage of trading using opposite Estee Lauder and Fresh Del positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Fresh Del 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 Fresh Del will offset losses from the drop in Fresh Del's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| Fresh Del vs. Alico Inc | Fresh Del vs. SW Seed Company | Fresh Del vs. Adecoagro SA | Fresh Del vs. Brasilagro Adr |
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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