Correlation Between Estee Lauder and LVMH Moet
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and LVMH Moet 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 LVMH Moet 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 LVMH Moet Hennessy, you can compare the effects of market volatilities on Estee Lauder and LVMH Moet 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 LVMH Moet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and LVMH Moet.
Diversification Opportunities for Estee Lauder and LVMH Moet
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Estee and LVMH is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and LVMH Moet Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Moet Hennessy 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 LVMH Moet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Moet Hennessy has no effect on the direction of Estee Lauder i.e., Estee Lauder and LVMH Moet go up and down completely randomly.
Pair Corralation between Estee Lauder and LVMH Moet
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the LVMH Moet. In addition to that, Estee Lauder is 1.58 times more volatile than LVMH Moet Hennessy. It trades about -0.08 of its total potential returns per unit of risk. LVMH Moet Hennessy is currently generating about 0.2 per unit of volatility. If you would invest 14,911 in LVMH Moet Hennessy on August 27, 2024 and sell it today you would earn a total of 2,284 from holding LVMH Moet Hennessy or generate 15.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 9.07% |
| Values | Daily Returns |
Estee Lauder Companies vs. LVMH Moet Hennessy
Performance |
| Timeline |
| Estee Lauder Companies |
| LVMH Moet Hennessy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Estee Lauder and LVMH Moet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and LVMH Moet
The main advantage of trading using opposite Estee Lauder and LVMH Moet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, LVMH Moet 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 LVMH Moet will offset losses from the drop in LVMH Moet's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Kimberly Clark |
| LVMH Moet vs. Hermes International SA | LVMH Moet vs. Hermes International SCA | LVMH Moet vs. Kering SA | LVMH Moet vs. Capri Holdings |
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.
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