Correlation Between Estee Lauder and MetaVia

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

Diversification Opportunities for Estee Lauder and MetaVia

0.41

Correlation Coefficient

Estee Lauder  MetaVia

Very weak diversification

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

Pair Corralation between Estee Lauder and MetaVia

Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the MetaVia. But the stock apears to be less risky and, when comparing its historical volatility, Estee Lauder Companies is 2.21 times less risky than MetaVia. The stock trades about -0.08 of its potential returns per unit of risk. The MetaVia is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  616.00  in MetaVia on October 4, 2024 and sell it today you would lose (405.00) from holding MetaVia or give up 65.75% 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.  MetaVia

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.

MetaVia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MetaVia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Estee Lauder and MetaVia

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

The idea behind Estee Lauder Companies and MetaVia 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..