Correlation Between Entegris and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Entegris and Estee Lauder 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 Entegris and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entegris and Estee Lauder Companies, you can compare the effects of market volatilities on Entegris and Estee Lauder 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 Entegris with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entegris and Estee Lauder.
Diversification Opportunities for Entegris and Estee Lauder
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entegris and Estee is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and Estee Lauder Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estee Lauder Companies and Entegris 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 Entegris are associated (or correlated) with Estee Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estee Lauder Companies has no effect on the direction of Entegris i.e., Entegris and Estee Lauder go up and down completely randomly.
Pair Corralation between Entegris and Estee Lauder
Given the investment horizon of 90 days Entegris is expected to generate 3.64 times less return on investment than Estee Lauder. But when comparing it to its historical volatility, Entegris is 1.01 times less risky than Estee Lauder. It trades about 0.03 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,861 in Estee Lauder Companies on September 1, 2024 and sell it today you would earn a total of 351.00 from holding Estee Lauder Companies or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entegris vs. Estee Lauder Companies
Performance |
| Timeline |
| Entegris |
| Estee Lauder Companies |
Entegris and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entegris and Estee Lauder
The main advantage of trading using opposite Entegris and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entegris position performs unexpectedly, Estee Lauder 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 Estee Lauder will offset losses from the drop in Estee Lauder's long position.| Entegris vs. NXP Semiconductors NV | Entegris vs. GSI Technology | Entegris vs. MaxLinear | Entegris vs. Texas Instruments Incorporated |
| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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