Correlation Between Estee Lauder and Mobix Labs

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

Diversification Opportunities for Estee Lauder and Mobix Labs

0.04

Correlation Coefficient

Estee Lauder  Mobix Labs

Significant diversification

The 3 months correlation between Estee and Mobix is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Mobix Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobix Labs 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 Mobix Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobix Labs has no effect on the direction of Estee Lauder i.e., Estee Lauder and Mobix Labs go up and down completely randomly.

Pair Corralation between Estee Lauder and Mobix Labs

Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Mobix Labs. But the stock apears to be less risky and, when comparing its historical volatility, Estee Lauder Companies is 12.64 times less risky than Mobix Labs. The stock trades about -0.1 of its potential returns per unit of risk. The Mobix Labs is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  114.00  in Mobix Labs on October 4, 2024 and sell it today you would earn a total of  56.00  from holding Mobix Labs or generate 49.12% return on investment over 90 days.

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

Estee Lauder Companies  vs.  Mobix Labs

Estee Lauder Companies

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Mobix Labs

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobix Labs are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental drivers, Mobix Labs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Estee Lauder and Mobix Labs

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

The idea behind Estee Lauder Companies and Mobix Labs 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.