Correlation Between Este Lauder and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Este Lauder and Unilever PLC 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 Este Lauder and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Este Lauder and Unilever PLC, you can compare the effects of market volatilities on Este Lauder and Unilever PLC 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 Este Lauder with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Este Lauder and Unilever PLC.
Diversification Opportunities for Este Lauder and Unilever PLC
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Este and Unilever is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Este Lauder and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC and Este 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 The Este Lauder are associated (or correlated) with Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of Este Lauder i.e., Este Lauder and Unilever PLC go up and down completely randomly.
Pair Corralation between Este Lauder and Unilever PLC
Assuming the 90 days trading horizon The Este Lauder is expected to generate 1.5 times more return on investment than Unilever PLC. However, Este Lauder is 1.5 times more volatile than Unilever PLC. It trades about 0.18 of its potential returns per unit of risk. Unilever PLC is currently generating about 0.03 per unit of risk. If you would invest 1,595 in The Este Lauder on September 4, 2024 and sell it today you would earn a total of 203.00 from holding The Este Lauder or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
The Este Lauder vs. Unilever PLC
Performance |
| Timeline |
| Este Lauder |
| Unilever PLC |
Este Lauder and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Este Lauder and Unilever PLC
The main advantage of trading using opposite Este Lauder and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Este Lauder position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.| Este Lauder vs. Unilever PLC | Este Lauder vs. Colgate Palmolive | Este Lauder vs. Coty Inc | Este Lauder vs. Natura Co Holding |
| Unilever PLC vs. The Este Lauder | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Coty Inc | Unilever PLC vs. Natura Co Holding |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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