Correlation Between Estee Lauder and TFI International
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and TFI International 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 TFI International 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 TFI International, you can compare the effects of market volatilities on Estee Lauder and TFI International 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 TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and TFI International.
Diversification Opportunities for Estee Lauder and TFI International
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Estee and TFI is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International 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 TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of Estee Lauder i.e., Estee Lauder and TFI International go up and down completely randomly.
Pair Corralation between Estee Lauder and TFI International
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the TFI International. In addition to that, Estee Lauder is 2.08 times more volatile than TFI International. It trades about -0.13 of its total potential returns per unit of risk. TFI International is currently generating about 0.16 per unit of volatility. If you would invest 13,545 in TFI International on August 30, 2024 and sell it today you would earn a total of 1,192 from holding TFI International or generate 8.8% 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. TFI International
Performance |
| Timeline |
| Estee Lauder Companies |
| TFI International |
Estee Lauder and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and TFI International
The main advantage of trading using opposite Estee Lauder and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, TFI International 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 TFI International will offset losses from the drop in TFI International's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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