Correlation Between ELF Beauty and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both ELF Beauty and Inter Parfums 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 ELF Beauty and Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELF Beauty and Inter Parfums, you can compare the effects of market volatilities on ELF Beauty and Inter Parfums 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 ELF Beauty with a short position of Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELF Beauty and Inter Parfums.
Diversification Opportunities for ELF Beauty and Inter Parfums
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between ELF and Inter is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ELF Beauty and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums and ELF Beauty 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 ELF Beauty are associated (or correlated) with Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of ELF Beauty i.e., ELF Beauty and Inter Parfums go up and down completely randomly.
Pair Corralation between ELF Beauty and Inter Parfums
Considering the 90-day investment horizon ELF Beauty is expected to generate 2.26 times more return on investment than Inter Parfums. However, ELF Beauty is 2.26 times more volatile than Inter Parfums. It trades about 0.2 of its potential returns per unit of risk. Inter Parfums is currently generating about 0.27 per unit of risk. If you would invest 11,006 in ELF Beauty on August 27, 2024 and sell it today you would earn a total of 1,987 from holding ELF Beauty or generate 18.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELF Beauty vs. Inter Parfums
Performance |
| Timeline |
| ELF Beauty |
| Inter Parfums |
ELF Beauty and Inter Parfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELF Beauty and Inter Parfums
The main advantage of trading using opposite ELF Beauty and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELF Beauty position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.| ELF Beauty vs. Procter Gamble | ELF Beauty vs. Colgate Palmolive | ELF Beauty vs. Coty Inc | ELF Beauty vs. Kenvue Inc |
| Inter Parfums vs. J J Snack | Inter Parfums vs. John B Sanfilippo | Inter Parfums vs. Innospec | Inter Parfums vs. Independent Bank |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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