Correlation Between Estee Lauder and Primoris Services
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Primoris Services 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 Primoris Services 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 Primoris Services, you can compare the effects of market volatilities on Estee Lauder and Primoris Services 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 Primoris Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Primoris Services.
Diversification Opportunities for Estee Lauder and Primoris Services
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Estee and Primoris is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Primoris Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primoris Services 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 Primoris Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primoris Services has no effect on the direction of Estee Lauder i.e., Estee Lauder and Primoris Services go up and down completely randomly.
Pair Corralation between Estee Lauder and Primoris Services
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Primoris Services. In addition to that, Estee Lauder is 1.26 times more volatile than Primoris Services. It trades about -0.08 of its total potential returns per unit of risk. Primoris Services is currently generating about 0.14 per unit of volatility. If you would invest 2,113 in Primoris Services on September 3, 2024 and sell it today you would earn a total of 6,258 from holding Primoris Services or generate 296.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Primoris Services
Performance |
| Timeline |
| Estee Lauder Companies |
| Primoris Services |
Estee Lauder and Primoris Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Primoris Services
The main advantage of trading using opposite Estee Lauder and Primoris Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Primoris Services 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 Primoris Services will offset losses from the drop in Primoris Services' long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| Primoris Services vs. MYR Group | Primoris Services vs. Granite Construction Incorporated | Primoris Services vs. Matrix Service Co | Primoris Services vs. Api Group Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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