Correlation Between LOral SA and Este Lauder
Can any of the company-specific risk be diversified away by investing in both LOral SA and Este 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 LOral SA and Este Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOral SA and The Este Lauder, you can compare the effects of market volatilities on LOral SA and Este 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 LOral SA with a short position of Este Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOral SA and Este Lauder.
Diversification Opportunities for LOral SA and Este Lauder
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LOral and Este is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding LOral SA and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Este Lauder and LOral SA 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 LOral SA are associated (or correlated) with Este Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Este Lauder has no effect on the direction of LOral SA i.e., LOral SA and Este Lauder go up and down completely randomly.
Pair Corralation between LOral SA and Este Lauder
Assuming the 90 days horizon LOral SA is expected to under-perform the Este Lauder. But the stock apears to be less risky and, when comparing its historical volatility, LOral SA is 2.08 times less risky than Este Lauder. The stock trades about -0.06 of its potential returns per unit of risk. The The Este Lauder is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 8,877 in The Este Lauder on November 1, 2024 and sell it today you would lose (937.00) from holding The Este Lauder or give up 10.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOral SA vs. The Este Lauder
Performance |
| Timeline |
| LOral SA |
| Este Lauder |
LOral SA and Este Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOral SA and Este Lauder
The main advantage of trading using opposite LOral SA and Este Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOral SA position performs unexpectedly, Este 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 Este Lauder will offset losses from the drop in Este Lauder's long position.| LOral SA vs. Colgate Palmolive | LOral SA vs. Superior Plus Corp | LOral SA vs. Origin Agritech | LOral SA vs. Identiv |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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