Correlation Between Este Lauder and Newell Brands

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

Diversification Opportunities for Este Lauder and Newell Brands

0.0

Correlation Coefficient

Este Lauder  Newell Brands

Pay attention - limited upside

The 3 months correlation between Este and Newell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Este Lauder and Newell Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newell Brands and Este 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 Newell Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newell Brands has no effect on the direction of Este Lauder i.e., Este Lauder and Newell Brands go up and down completely randomly.

Pair Corralation between Este Lauder and Newell Brands

If you would invest  5,019  in Newell Brands on October 6, 2024 and sell it today you would earn a total of  1,086  from holding Newell Brands or generate 21.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.56%
Values	Daily Returns

The Este Lauder  vs.  Newell Brands

Este Lauder

Risk-Adjusted Performance

0 of 100

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 somewhat strong fundamental indicators, Este Lauder is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Newell Brands

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newell Brands are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Newell Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Este Lauder and Newell Brands

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

The idea behind The Este Lauder and Newell Brands 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.