Correlation Between Estee Lauder and Post Holdings
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Post Holdings 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 Post Holdings 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 Post Holdings, you can compare the effects of market volatilities on Estee Lauder and Post Holdings 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 Post Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Post Holdings.
Diversification Opportunities for Estee Lauder and Post Holdings
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Estee and Post is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Post Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post Holdings 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 Post Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post Holdings has no effect on the direction of Estee Lauder i.e., Estee Lauder and Post Holdings go up and down completely randomly.
Pair Corralation between Estee Lauder and Post Holdings
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Post Holdings. In addition to that, Estee Lauder is 4.18 times more volatile than Post Holdings. It trades about -0.17 of its total potential returns per unit of risk. Post Holdings is currently generating about 0.05 per unit of volatility. If you would invest 11,240 in Post Holdings on August 24, 2024 and sell it today you would earn a total of 134.00 from holding Post Holdings or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Post Holdings
Performance |
| Timeline |
| Estee Lauder Companies |
| Post Holdings |
Estee Lauder and Post Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Post Holdings
The main advantage of trading using opposite Estee Lauder and Post Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Post Holdings 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 Post Holdings will offset losses from the drop in Post Holdings' long position.| Estee Lauder vs. Eshallgo Class A | Estee Lauder vs. Amtech Systems | Estee Lauder vs. Gold Fields Ltd | Estee Lauder vs. Aegean Airlines SA |
| Post Holdings vs. Bellring Brands LLC | Post Holdings vs. Treehouse Foods | Post Holdings vs. Ingredion Incorporated | Post Holdings vs. JM Smucker |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |