Correlation Between Estee Lauder and Keurig Dr
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Keurig Dr 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 Keurig Dr 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 Keurig Dr Pepper, you can compare the effects of market volatilities on Estee Lauder and Keurig Dr 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 Keurig Dr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Keurig Dr.
Diversification Opportunities for Estee Lauder and Keurig Dr
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Estee and Keurig is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Estee Lauder i.e., Estee Lauder and Keurig Dr go up and down completely randomly.
Pair Corralation between Estee Lauder and Keurig Dr
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Keurig Dr. In addition to that, Estee Lauder is 3.33 times more volatile than Keurig Dr Pepper. It trades about -0.17 of its total potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.16 per unit of volatility. If you would invest 3,458 in Keurig Dr Pepper on August 26, 2024 and sell it today you would lose (192.00) from holding Keurig Dr Pepper or give up 5.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Keurig Dr Pepper
Performance |
| Timeline |
| Estee Lauder Companies |
| Keurig Dr Pepper |
Estee Lauder and Keurig Dr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Keurig Dr
The main advantage of trading using opposite Estee Lauder and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Keurig Dr 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 Keurig Dr will offset losses from the drop in Keurig Dr's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| Keurig Dr vs. Celsius Holdings | Keurig Dr vs. Vita Coco | Keurig Dr vs. PepsiCo | Keurig Dr vs. Coca Cola Femsa SAB |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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