Correlation Between Estee Lauder and Performance Food
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on Estee Lauder and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Performance Food.
Diversification Opportunities for Estee Lauder and Performance Food
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Estee and Performance is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Estee Lauder i.e., Estee Lauder and Performance Food go up and down completely randomly.
Pair Corralation between Estee Lauder and Performance Food
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Performance Food. In addition to that, Estee Lauder is 1.77 times more volatile than Performance Food Group. It trades about -0.07 of its total potential returns per unit of risk. Performance Food Group is currently generating about 0.06 per unit of volatility. If you would invest 6,005 in Performance Food Group on August 28, 2024 and sell it today you would earn a total of 2,871 from holding Performance Food Group or generate 47.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Performance Food Group
Performance |
| Timeline |
| Estee Lauder Companies |
| Performance Food |
Estee Lauder and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Performance Food
The main advantage of trading using opposite Estee Lauder and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Kimberly Clark |
| Performance Food vs. Sysco | Performance Food vs. The Chefs Warehouse | Performance Food vs. United Natural Foods | Performance Food vs. Calavo Growers |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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