Correlation Between Estee Lauder and Veru
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Veru 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 Veru 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 Veru Inc, you can compare the effects of market volatilities on Estee Lauder and Veru 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 Veru. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Veru.
Diversification Opportunities for Estee Lauder and Veru
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Estee and Veru is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Veru Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veru Inc 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 Veru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veru Inc has no effect on the direction of Estee Lauder i.e., Estee Lauder and Veru go up and down completely randomly.
Pair Corralation between Estee Lauder and Veru
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to generate 1.43 times more return on investment than Veru. However, Estee Lauder is 1.43 times more volatile than Veru Inc. It trades about -0.22 of its potential returns per unit of risk. Veru Inc is currently generating about -0.4 per unit of risk. If you would invest 8,779 in Estee Lauder Companies on August 24, 2024 and sell it today you would lose (2,095) from holding Estee Lauder Companies or give up 23.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Veru Inc
Performance |
| Timeline |
| Estee Lauder Companies |
| Veru Inc |
Estee Lauder and Veru Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Veru
The main advantage of trading using opposite Estee Lauder and Veru positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Veru 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 Veru will offset losses from the drop in Veru's long position.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Kimberly Clark | Estee Lauder vs. Colgate Palmolive |
| Veru vs. Seres Therapeutics | Veru vs. Protalix Biotherapeutics | Veru vs. Lexicon Pharmaceuticals | Veru vs. Sarepta Therapeutics |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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