Correlation Between ScanSource and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both ScanSource 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 ScanSource and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Estee Lauder Companies, you can compare the effects of market volatilities on ScanSource 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 ScanSource with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Estee Lauder.
Diversification Opportunities for ScanSource and Estee Lauder
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between ScanSource and Estee is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource 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 ScanSource 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 ScanSource 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 ScanSource i.e., ScanSource and Estee Lauder go up and down completely randomly.
Pair Corralation between ScanSource and Estee Lauder
Given the investment horizon of 90 days ScanSource is expected to generate 0.75 times more return on investment than Estee Lauder. However, ScanSource is 1.33 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 -0.11 per unit of risk. If you would invest 4,891 in ScanSource on August 25, 2024 and sell it today you would earn a total of 219.00 from holding ScanSource or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Estee Lauder Companies
Performance |
| Timeline |
| ScanSource |
| Estee Lauder Companies |
ScanSource and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Estee Lauder
The main advantage of trading using opposite ScanSource and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource 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.| ScanSource vs. Climb Global Solutions | ScanSource vs. Insight Enterprises | ScanSource vs. Synnex | ScanSource vs. PC Connection |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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