Correlation Between Reckitt Benckiser and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser 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 Reckitt Benckiser and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reckitt Benckiser Group and Estee Lauder Companies, you can compare the effects of market volatilities on Reckitt Benckiser 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 Reckitt Benckiser with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and Estee Lauder.
Diversification Opportunities for Reckitt Benckiser and Estee Lauder
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Reckitt and Estee is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group 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 Reckitt Benckiser 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 Reckitt Benckiser Group 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 Reckitt Benckiser i.e., Reckitt Benckiser and Estee Lauder go up and down completely randomly.
Pair Corralation between Reckitt Benckiser and Estee Lauder
Assuming the 90 days horizon Reckitt Benckiser is expected to generate 5.61 times less return on investment than Estee Lauder. In addition to that, Reckitt Benckiser is 1.07 times more volatile than Estee Lauder Companies. It trades about 0.02 of its total potential returns per unit of risk. Estee Lauder Companies is currently generating about 0.14 per unit of volatility. If you would invest 7,470 in Estee Lauder Companies on October 20, 2024 and sell it today you would earn a total of 316.00 from holding Estee Lauder Companies or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reckitt Benckiser Group vs. Estee Lauder Companies
Performance |
| Timeline |
| Reckitt Benckiser |
| Estee Lauder Companies |
Reckitt Benckiser and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reckitt Benckiser and Estee Lauder
The main advantage of trading using opposite Reckitt Benckiser and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reckitt Benckiser 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.| Reckitt Benckiser vs. Church Dwight | Reckitt Benckiser vs. Kimberly Clark de Mexico | Reckitt Benckiser vs. LOreal Co ADR | Reckitt Benckiser vs. Shiseido Company |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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