Correlation Between Estee Lauder and Albertsons Companies

Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Albertsons Companies 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 Estee Lauder and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Estee Lauder Companies and Albertsons Companies, you can compare the effects of market volatilities on Estee Lauder and Albertsons Companies 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 Estee Lauder with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Albertsons Companies.

Diversification Opportunities for Estee Lauder and Albertsons Companies

-0.62

Correlation Coefficient

Estee Lauder  Albertsons Companies

Excellent diversification

The 3 months correlation between Estee and Albertsons is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Estee Lauder 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 Estee Lauder Companies are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Estee Lauder i.e., Estee Lauder and Albertsons Companies go up and down completely randomly.

Pair Corralation between Estee Lauder and Albertsons Companies

Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Albertsons Companies. In addition to that, Estee Lauder is 1.89 times more volatile than Albertsons Companies. It trades about -0.05 of its total potential returns per unit of risk. Albertsons Companies is currently generating about 0.11 per unit of volatility. If you would invest  1,947  in Albertsons Companies on December 28, 2024 and sell it today you would earn a total of  215.00  from holding Albertsons Companies or generate 11.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Estee Lauder Companies  vs.  Albertsons Companies

Estee Lauder Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Estee Lauder Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Albertsons Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Albertsons Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Estee Lauder and Albertsons Companies

The main advantage of trading using opposite Estee Lauder and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.

The idea behind Estee Lauder Companies and Albertsons 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.