Correlation Between Estee Lauder and 302635AK3

Can any of the company-specific risk be diversified away by investing in both Estee Lauder and 302635AK3 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 302635AK3 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 FSK 3125 12 OCT 28, you can compare the effects of market volatilities on Estee Lauder and 302635AK3 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 302635AK3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and 302635AK3.

Diversification Opportunities for Estee Lauder and 302635AK3

0.09

Correlation Coefficient

Estee Lauder  302635AK3

Significant diversification

The 3 months correlation between Estee and 302635AK3 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and FSK 3125 12 OCT 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSK 3125 12 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 302635AK3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSK 3125 12 has no effect on the direction of Estee Lauder i.e., Estee Lauder and 302635AK3 go up and down completely randomly.

Pair Corralation between Estee Lauder and 302635AK3

Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the 302635AK3. In addition to that, Estee Lauder is 3.84 times more volatile than FSK 3125 12 OCT 28. It trades about -0.07 of its total potential returns per unit of risk. FSK 3125 12 OCT 28 is currently generating about 0.0 per unit of volatility. If you would invest  8,183  in FSK 3125 12 OCT 28 on October 4, 2024 and sell it today you would lose (30.00) from holding FSK 3125 12 OCT 28 or give up 0.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.93%
Values	Daily Returns

Estee Lauder Companies  vs.  FSK 3125 12 OCT 28

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.

FSK 3125 12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FSK 3125 12 OCT 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FSK 3125 12 OCT 28 investors.

Pair Trading with Estee Lauder and 302635AK3

The main advantage of trading using opposite Estee Lauder and 302635AK3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, 302635AK3 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 302635AK3 will offset losses from the drop in 302635AK3's long position.

The idea behind Estee Lauder Companies and FSK 3125 12 OCT 28 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.