Correlation Between Nextplat Corp and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Nextplat Corp 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 Nextplat Corp and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextplat Corp and Estee Lauder Companies, you can compare the effects of market volatilities on Nextplat Corp 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 Nextplat Corp with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextplat Corp and Estee Lauder.
Diversification Opportunities for Nextplat Corp and Estee Lauder
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nextplat and Estee is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nextplat 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 Nextplat Corp 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 Nextplat 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 Nextplat Corp i.e., Nextplat Corp and Estee Lauder go up and down completely randomly.
Pair Corralation between Nextplat Corp and Estee Lauder
Given the investment horizon of 90 days Nextplat Corp is expected to generate 1.4 times more return on investment than Estee Lauder. However, Nextplat Corp is 1.4 times more volatile than Estee Lauder Companies. It trades about -0.08 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 114.00 in Nextplat Corp on August 28, 2024 and sell it today you would lose (20.00) from holding Nextplat Corp or give up 17.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextplat Corp vs. Estee Lauder Companies
Performance |
| Timeline |
| Nextplat Corp |
| Estee Lauder Companies |
Nextplat Corp and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextplat Corp and Estee Lauder
The main advantage of trading using opposite Nextplat Corp and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextplat Corp 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.The idea behind Nextplat Corp and Estee Lauder Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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