Correlation Between Estee Lauder and Spectrum Brands
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Spectrum Brands 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 Spectrum Brands 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 Spectrum Brands Holdings, you can compare the effects of market volatilities on Estee Lauder and Spectrum Brands 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 Spectrum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Spectrum Brands.
Diversification Opportunities for Estee Lauder and Spectrum Brands
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Estee and Spectrum is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands 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 Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Estee Lauder i.e., Estee Lauder and Spectrum Brands go up and down completely randomly.
Pair Corralation between Estee Lauder and Spectrum Brands
Allowing for the 90-day total investment horizon Estee Lauder is expected to generate 1.46 times less return on investment than Spectrum Brands. In addition to that, Estee Lauder is 2.52 times more volatile than Spectrum Brands Holdings. It trades about 0.01 of its total potential returns per unit of risk. Spectrum Brands Holdings is currently generating about 0.02 per unit of volatility. If you would invest 8,982 in Spectrum Brands Holdings on September 12, 2024 and sell it today you would earn a total of 122.00 from holding Spectrum Brands Holdings or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Spectrum Brands Holdings
Performance |
| Timeline |
| Estee Lauder Companies |
| Spectrum Brands Holdings |
Estee Lauder and Spectrum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Spectrum Brands
The main advantage of trading using opposite Estee Lauder and Spectrum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Spectrum Brands 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 Spectrum Brands will offset losses from the drop in Spectrum Brands' long position.| Estee Lauder vs. Edgewell Personal Care | Estee Lauder vs. Inter Parfums | Estee Lauder vs. Nu Skin Enterprises | Estee Lauder vs. Helen of Troy |
| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |