Correlation Between Marvell Technology and Este Lauder

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

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

Diversification Opportunities for Marvell Technology and Este Lauder

0.48

Correlation Coefficient

Marvell Technology  Este Lauder

Very weak diversification

The 3 months correlation between Marvell and Este is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Este Lauder and Marvell Technology 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 Marvell Technology 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 Marvell Technology i.e., Marvell Technology and Este Lauder go up and down completely randomly.

Pair Corralation between Marvell Technology and Este Lauder

Assuming the 90 days trading horizon Marvell Technology is expected to under-perform the Este Lauder. In addition to that, Marvell Technology is 1.43 times more volatile than The Este Lauder. It trades about -0.07 of its total potential returns per unit of risk. The Este Lauder is currently generating about -0.04 per unit of volatility. If you would invest  1,942  in The Este Lauder on December 5, 2024 and sell it today you would lose (174.00) from holding The Este Lauder or give up 8.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Marvell Technology  vs.  The Este Lauder

Marvell Technology

Risk-Adjusted Performance

Very Weak

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

Este 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 latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Marvell Technology and Este Lauder

The main advantage of trading using opposite Marvell Technology and Este Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology 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 Marvell Technology 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.