Correlation Between Kellanova and Estee Lauder

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

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

Diversification Opportunities for Kellanova and Estee Lauder

-0.49

Correlation Coefficient

Kellanova  Estee Lauder

Very good diversification

The 3 months correlation between Kellanova and Estee is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Estee Lauder Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estee Lauder Companies and Kellanova 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 Kellanova are associated (or correlated) with Estee Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estee Lauder Companies has no effect on the direction of Kellanova i.e., Kellanova and Estee Lauder go up and down completely randomly.

Pair Corralation between Kellanova and Estee Lauder

Taking into account the 90-day investment horizon Kellanova is expected to generate 0.05 times more return on investment than Estee Lauder. However, Kellanova is 19.39 times less risky than Estee Lauder. It trades about 0.27 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.03 per unit of risk. If you would invest  8,026  in Kellanova on December 28, 2024 and sell it today you would earn a total of  219.00  from holding Kellanova or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kellanova  vs.  Estee Lauder Companies

Kellanova

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kellanova is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Estee Lauder Companies

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Kellanova and Estee Lauder

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

The idea behind Kellanova and Estee Lauder Companies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.