Correlation Between Spectrum Brands and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Spectrum Brands 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 Spectrum Brands and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Brands Holdings and Estee Lauder Companies, you can compare the effects of market volatilities on Spectrum Brands 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 Spectrum Brands with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Estee Lauder.
Diversification Opportunities for Spectrum Brands and Estee Lauder
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Spectrum and Estee is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings 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 Spectrum Brands 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 Spectrum Brands Holdings 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 Spectrum Brands i.e., Spectrum Brands and Estee Lauder go up and down completely randomly.
Pair Corralation between Spectrum Brands and Estee Lauder
Considering the 90-day investment horizon Spectrum Brands Holdings is expected to generate 0.4 times more return on investment than Estee Lauder. However, Spectrum Brands Holdings is 2.52 times less risky than Estee Lauder. It trades about 0.02 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about 0.01 per unit of risk. If you would invest 8,982 in Spectrum Brands Holdings on September 12, 2024 and sell it today you would earn a total of 122.00 from holding Spectrum Brands Holdings or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum Brands Holdings vs. Estee Lauder Companies
Performance |
| Timeline |
| Spectrum Brands Holdings |
| Estee Lauder Companies |
Spectrum Brands and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum Brands and Estee Lauder
The main advantage of trading using opposite Spectrum Brands and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands 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.| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
| Estee Lauder vs. Edgewell Personal Care | Estee Lauder vs. Inter Parfums | Estee Lauder vs. Nu Skin Enterprises | Estee Lauder vs. Helen of Troy |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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