Correlation Between Estee Lauder and Rackspace Technology
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Rackspace Technology 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 Rackspace Technology 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 Rackspace Technology, you can compare the effects of market volatilities on Estee Lauder and Rackspace Technology 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 Rackspace Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Rackspace Technology.
Diversification Opportunities for Estee Lauder and Rackspace Technology
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Estee and Rackspace is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Rackspace Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackspace Technology 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 Rackspace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackspace Technology has no effect on the direction of Estee Lauder i.e., Estee Lauder and Rackspace Technology go up and down completely randomly.
Pair Corralation between Estee Lauder and Rackspace Technology
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Rackspace Technology. But the stock apears to be less risky and, when comparing its historical volatility, Estee Lauder Companies is 1.63 times less risky than Rackspace Technology. The stock trades about -0.07 of its potential returns per unit of risk. The Rackspace Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 172.00 in Rackspace Technology on November 9, 2024 and sell it today you would earn a total of 118.00 from holding Rackspace Technology or generate 68.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Rackspace Technology
Performance |
| Timeline |
| Estee Lauder Companies |
| Rackspace Technology |
Estee Lauder and Rackspace Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Rackspace Technology
The main advantage of trading using opposite Estee Lauder and Rackspace Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Rackspace Technology 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 Rackspace Technology will offset losses from the drop in Rackspace Technology's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| Rackspace Technology vs. GigaCloud Technology Class | Rackspace Technology vs. Alarum Technologies | Rackspace Technology vs. Stem Inc | Rackspace Technology vs. Pagaya Technologies |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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