Correlation Between Estee Lauder and Bellring Brands

Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Bellring Brands 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 Bellring Brands 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 Bellring Brands LLC, you can compare the effects of market volatilities on Estee Lauder and Bellring Brands 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 Bellring Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Bellring Brands.

Diversification Opportunities for Estee Lauder and Bellring Brands

0.41

Correlation Coefficient

Estee Lauder  Bellring Brands

Very weak diversification

The 3 months correlation between Estee and Bellring is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Bellring Brands LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellring Brands LLC 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 Bellring Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellring Brands LLC has no effect on the direction of Estee Lauder i.e., Estee Lauder and Bellring Brands go up and down completely randomly.

Pair Corralation between Estee Lauder and Bellring Brands

Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Bellring Brands. In addition to that, Estee Lauder is 1.5 times more volatile than Bellring Brands LLC. It trades about -0.05 of its total potential returns per unit of risk. Bellring Brands LLC is currently generating about 0.0 per unit of volatility. If you would invest  7,564  in Bellring Brands LLC on December 28, 2024 and sell it today you would lose (146.00) from holding Bellring Brands LLC or give up 1.93% of portfolio value over 90 days.

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

Estee Lauder Companies  vs.  Bellring Brands LLC

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.

Bellring Brands LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bellring Brands LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Bellring Brands is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Estee Lauder and Bellring Brands

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

The idea behind Estee Lauder Companies and Bellring Brands LLC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..