Correlation Between Virgin Group and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Virgin Group 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 Virgin Group and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Group Acquisition and Estee Lauder Companies, you can compare the effects of market volatilities on Virgin Group 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 Virgin Group with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Group and Estee Lauder.
Diversification Opportunities for Virgin Group and Estee Lauder
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Virgin and Estee is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Group Acquisition 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 Virgin Group 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 Virgin Group Acquisition 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 Virgin Group i.e., Virgin Group and Estee Lauder go up and down completely randomly.
Pair Corralation between Virgin Group and Estee Lauder
Given the investment horizon of 90 days Virgin Group Acquisition is expected to generate 0.78 times more return on investment than Estee Lauder. However, Virgin Group Acquisition is 1.28 times less risky than Estee Lauder. It trades about 0.04 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.15 per unit of risk. If you would invest 134.00 in Virgin Group Acquisition on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Virgin Group Acquisition or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Group Acquisition vs. Estee Lauder Companies
Performance |
| Timeline |
| Virgin Group Acquisition |
| Estee Lauder Companies |
Virgin Group and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Group and Estee Lauder
The main advantage of trading using opposite Virgin Group and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Group 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.| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Kimberly Clark |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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