Correlation Between Estée Lauder and SPARTAN STORES

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

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

Diversification Opportunities for Estée Lauder and SPARTAN STORES

-0.53

Correlation Coefficient

Estée Lauder  SPARTAN STORES

Excellent diversification

The 3 months correlation between Estée and SPARTAN is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Este Lauder and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES and Estée 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 The Este Lauder are associated (or correlated) with SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of Estée Lauder i.e., Estée Lauder and SPARTAN STORES go up and down completely randomly.

Pair Corralation between Estée Lauder and SPARTAN STORES

Assuming the 90 days trading horizon The Este Lauder is expected to under-perform the SPARTAN STORES. In addition to that, Estée Lauder is 1.45 times more volatile than SPARTAN STORES. It trades about -0.07 of its total potential returns per unit of risk. SPARTAN STORES is currently generating about 0.07 per unit of volatility. If you would invest  1,711  in SPARTAN STORES on December 29, 2024 and sell it today you would earn a total of  139.00  from holding SPARTAN STORES or generate 8.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

The Este Lauder  vs.  SPARTAN STORES

Estée Lauder

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Este Lauder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SPARTAN STORES

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPARTAN STORES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, SPARTAN STORES may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Estée Lauder and SPARTAN STORES

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

The idea behind The Este Lauder and SPARTAN STORES 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 CEOs Directory module to screen CEOs from public companies around the world.