Correlation Between National Beverage and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Estee Lauder Companies, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Estee Lauder.
Diversification Opportunities for National Beverage and Estee Lauder
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and Estee is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp 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 National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Estee Lauder go up and down completely randomly.
Pair Corralation between National Beverage and Estee Lauder
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.68 times more return on investment than Estee Lauder. However, National Beverage Corp is 1.48 times less risky than Estee Lauder. It trades about 0.06 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.13 per unit of risk. If you would invest 4,345 in National Beverage Corp on September 1, 2024 and sell it today you would earn a total of 594.00 from holding National Beverage Corp or generate 13.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Estee Lauder Companies
Performance |
| Timeline |
| National Beverage Corp |
| Estee Lauder Companies |
National Beverage and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Estee Lauder
The main advantage of trading using opposite National Beverage and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.| National Beverage vs. Celsius Holdings | National Beverage vs. Monster Beverage Corp | National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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