Correlation Between JD and Este Lauder
Can any of the company-specific risk be diversified away by investing in both JD and Este Lauder 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 JD and Este Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Inc and The Este Lauder, you can compare the effects of market volatilities on JD and Este Lauder 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 JD with a short position of Este Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Este Lauder.
Diversification Opportunities for JD and Este Lauder
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JD and Este is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Este Lauder and JD 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 JD Inc are associated (or correlated) with Este Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Este Lauder has no effect on the direction of JD i.e., JD and Este Lauder go up and down completely randomly.
Pair Corralation between JD and Este Lauder
Assuming the 90 days horizon JD Inc is expected to generate 0.96 times more return on investment than Este Lauder. However, JD Inc is 1.05 times less risky than Este Lauder. It trades about 0.11 of its potential returns per unit of risk. The Este Lauder is currently generating about -0.05 per unit of risk. If you would invest 3,325 in JD Inc on December 28, 2024 and sell it today you would earn a total of 675.00 from holding JD Inc or generate 20.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
JD Inc vs. The Este Lauder
Performance |
Timeline |
JD Inc |
Este Lauder |
JD and Este Lauder Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JD and Este Lauder
The main advantage of trading using opposite JD and Este Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD position performs unexpectedly, Este Lauder 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 Este Lauder will offset losses from the drop in Este Lauder's long position.The idea behind JD Inc and The Este Lauder 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.Este Lauder vs. Raiffeisen Bank International | Este Lauder vs. AMAG Austria Metall | Este Lauder vs. Wiener Privatbank SE | Este Lauder vs. SBM Offshore NV |
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 Stocks Directory module to find actively traded stocks across global markets.
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