Correlation Between Estee Lauder and TKO Group
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and TKO Group 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 TKO Group 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 TKO Group Holdings,, you can compare the effects of market volatilities on Estee Lauder and TKO Group 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 TKO Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and TKO Group.
Diversification Opportunities for Estee Lauder and TKO Group
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Estee and TKO is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and TKO Group Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKO Group 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 TKO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKO Group Holdings, has no effect on the direction of Estee Lauder i.e., Estee Lauder and TKO Group go up and down completely randomly.
Pair Corralation between Estee Lauder and TKO Group
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the TKO Group. In addition to that, Estee Lauder is 2.87 times more volatile than TKO Group Holdings,. It trades about -0.15 of its total potential returns per unit of risk. TKO Group Holdings, is currently generating about 0.43 per unit of volatility. If you would invest 11,625 in TKO Group Holdings, on August 28, 2024 and sell it today you would earn a total of 2,054 from holding TKO Group Holdings, or generate 17.67% 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. TKO Group Holdings,
Performance |
| Timeline |
| Estee Lauder Companies |
| TKO Group Holdings, |
Estee Lauder and TKO Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and TKO Group
The main advantage of trading using opposite Estee Lauder and TKO Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, TKO Group 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 TKO Group will offset losses from the drop in TKO Group's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Kimberly Clark |
| TKO Group vs. Cardinal Health | TKO Group vs. Meiwu Technology Co | TKO Group vs. Titan Machinery | TKO Group vs. Simon Property Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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