Correlation Between Estee Lauder and SP 500
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and SP 500 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 SP 500 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 SP 500 Financials, you can compare the effects of market volatilities on Estee Lauder and SP 500 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 SP 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and SP 500.
Diversification Opportunities for Estee Lauder and SP 500
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Estee and SPSY is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and SP 500 Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP 500 Financials 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 SP 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP 500 Financials has no effect on the direction of Estee Lauder i.e., Estee Lauder and SP 500 go up and down completely randomly.
Pair Corralation between Estee Lauder and SP 500
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the SP 500. In addition to that, Estee Lauder is 3.1 times more volatile than SP 500 Financials. It trades about -0.12 of its total potential returns per unit of risk. SP 500 Financials is currently generating about 0.14 per unit of volatility. If you would invest 67,094 in SP 500 Financials on September 1, 2024 and sell it today you would earn a total of 18,088 from holding SP 500 Financials or generate 26.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.95% |
| Values | Daily Returns |
Estee Lauder Companies vs. SP 500 Financials
Performance |
| Timeline |
Estee Lauder and SP 500 Volatility Contrast
Predicted Return Density |
| Returns |
Estee Lauder Companies
Pair trading matchups for Estee Lauder
SP 500 Financials
Pair trading matchups for SP 500
Pair Trading with Estee Lauder and SP 500
The main advantage of trading using opposite Estee Lauder and SP 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, SP 500 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 SP 500 will offset losses from the drop in SP 500's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| SP 500 vs. Artisan Partners Asset | SP 500 vs. Inflection Point Acquisition | SP 500 vs. Analog Devices | SP 500 vs. Citizens Bancorp Investment |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |