Correlation Between Estee Lauder and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Estee Lauder and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Summit Materials.
Diversification Opportunities for Estee Lauder and Summit Materials
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Estee and Summit is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Estee Lauder i.e., Estee Lauder and Summit Materials go up and down completely randomly.
Pair Corralation between Estee Lauder and Summit Materials
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Summit Materials. In addition to that, Estee Lauder is 1.34 times more volatile than Summit Materials. It trades about -0.07 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.06 per unit of volatility. If you would invest 3,423 in Summit Materials on September 2, 2024 and sell it today you would earn a total of 1,671 from holding Summit Materials or generate 48.82% 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. Summit Materials
Performance |
| Timeline |
| Estee Lauder Companies |
| Summit Materials |
Estee Lauder and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Summit Materials
The main advantage of trading using opposite Estee Lauder and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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