Correlation Between Kimberly Clark and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Kimberly Clark 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 Kimberly Clark and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimberly Clark and Estee Lauder Companies, you can compare the effects of market volatilities on Kimberly Clark 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 Kimberly Clark with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and Estee Lauder.
Diversification Opportunities for Kimberly Clark and Estee Lauder
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kimberly and Estee is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark 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 Kimberly Clark 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 Kimberly Clark 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 Kimberly Clark i.e., Kimberly Clark and Estee Lauder go up and down completely randomly.
Pair Corralation between Kimberly Clark and Estee Lauder
Considering the 90-day investment horizon Kimberly Clark is expected to generate 121.7 times less return on investment than Estee Lauder. But when comparing it to its historical volatility, Kimberly Clark is 1.53 times less risky than Estee Lauder. It trades about 0.0 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 7,498 in Estee Lauder Companies on November 1, 2024 and sell it today you would earn a total of 1,004 from holding Estee Lauder Companies or generate 13.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kimberly Clark vs. Estee Lauder Companies
Performance |
| Timeline |
| Kimberly Clark |
| Estee Lauder Companies |
Kimberly Clark and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimberly Clark and Estee Lauder
The main advantage of trading using opposite Kimberly Clark and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimberly Clark 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.| Kimberly Clark vs. Colgate Palmolive | Kimberly Clark vs. Church Dwight | Kimberly Clark vs. Unilever PLC ADR | Kimberly Clark vs. Procter Gamble |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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