Correlation Between Estee Lauder and Sonida Senior
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Sonida Senior 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 Sonida Senior 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 Sonida Senior Living, you can compare the effects of market volatilities on Estee Lauder and Sonida Senior 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 Sonida Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Sonida Senior.
Diversification Opportunities for Estee Lauder and Sonida Senior
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Estee and Sonida is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Sonida Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonida Senior Living 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 Sonida Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonida Senior Living has no effect on the direction of Estee Lauder i.e., Estee Lauder and Sonida Senior go up and down completely randomly.
Pair Corralation between Estee Lauder and Sonida Senior
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Sonida Senior. But the stock apears to be less risky and, when comparing its historical volatility, Estee Lauder Companies is 1.86 times less risky than Sonida Senior. The stock trades about -0.06 of its potential returns per unit of risk. The Sonida Senior Living is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 874.00 in Sonida Senior Living on September 3, 2024 and sell it today you would earn a total of 1,688 from holding Sonida Senior Living or generate 193.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Sonida Senior Living
Performance |
| Timeline |
| Estee Lauder Companies |
| Sonida Senior Living |
Estee Lauder and Sonida Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Sonida Senior
The main advantage of trading using opposite Estee Lauder and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Sonida Senior 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 Sonida Senior will offset losses from the drop in Sonida Senior's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| Sonida Senior vs. Select Medical Holdings | Sonida Senior vs. Encompass Health Corp | Sonida Senior vs. Pennant Group | Sonida Senior vs. Acadia Healthcare |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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