Correlation Between Estee Lauder and Waldencast Acquisition
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Waldencast Acquisition 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 Waldencast Acquisition 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 Waldencast Acquisition Corp, you can compare the effects of market volatilities on Estee Lauder and Waldencast Acquisition 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 Waldencast Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Waldencast Acquisition.
Diversification Opportunities for Estee Lauder and Waldencast Acquisition
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Estee and Waldencast is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Waldencast Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waldencast Acquisition 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 Waldencast Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waldencast Acquisition has no effect on the direction of Estee Lauder i.e., Estee Lauder and Waldencast Acquisition go up and down completely randomly.
Pair Corralation between Estee Lauder and Waldencast Acquisition
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Waldencast Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Estee Lauder Companies is 1.76 times less risky than Waldencast Acquisition. The stock trades about -0.07 of its potential returns per unit of risk. The Waldencast Acquisition Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 921.00 in Waldencast Acquisition Corp on August 24, 2024 and sell it today you would lose (589.00) from holding Waldencast Acquisition Corp or give up 63.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Waldencast Acquisition Corp
Performance |
| Timeline |
| Estee Lauder Companies |
| Waldencast Acquisition |
Estee Lauder and Waldencast Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Waldencast Acquisition
The main advantage of trading using opposite Estee Lauder and Waldencast Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Waldencast Acquisition 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 Waldencast Acquisition will offset losses from the drop in Waldencast Acquisition's long position.| Estee Lauder vs. Eshallgo Class A | Estee Lauder vs. Amtech Systems | Estee Lauder vs. Gold Fields Ltd | Estee Lauder vs. Aegean Airlines SA |
| Waldencast Acquisition vs. Where Food Comes | Waldencast Acquisition vs. VTEX | Waldencast Acquisition vs. Vertex | Waldencast Acquisition vs. BASE Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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