Correlation Between Estee Lauder and Unicharm
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Unicharm 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 Unicharm 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 Unicharm, you can compare the effects of market volatilities on Estee Lauder and Unicharm 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 Unicharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Unicharm.
Diversification Opportunities for Estee Lauder and Unicharm
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Estee and Unicharm is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Unicharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm 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 Unicharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicharm has no effect on the direction of Estee Lauder i.e., Estee Lauder and Unicharm go up and down completely randomly.
Pair Corralation between Estee Lauder and Unicharm
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Unicharm. But the stock apears to be less risky and, when comparing its historical volatility, Estee Lauder Companies is 1.44 times less risky than Unicharm. The stock trades about -0.13 of its potential returns per unit of risk. The Unicharm is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,295 in Unicharm on September 1, 2024 and sell it today you would lose (778.00) from holding Unicharm or give up 23.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Estee Lauder Companies vs. Unicharm
Performance |
| Timeline |
| Estee Lauder Companies |
| Unicharm |
Estee Lauder and Unicharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Unicharm
The main advantage of trading using opposite Estee Lauder and Unicharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Unicharm 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 Unicharm will offset losses from the drop in Unicharm's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| Unicharm vs. Estee Lauder Companies | Unicharm vs. Honest Company | Unicharm vs. Hims Hers Health | Unicharm vs. Procter Gamble |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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