Correlation Between MetaVia and Estee Lauder

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

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

Diversification Opportunities for MetaVia and Estee Lauder

0.2

Correlation Coefficient

MetaVia  Estee Lauder

Modest diversification

The 3 months correlation between MetaVia and Estee is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding MetaVia 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 MetaVia 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 MetaVia 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 MetaVia i.e., MetaVia and Estee Lauder go up and down completely randomly.

Pair Corralation between MetaVia and Estee Lauder

Given the investment horizon of 90 days MetaVia is expected to generate 2.15 times more return on investment than Estee Lauder. However, MetaVia is 2.15 times more volatile than Estee Lauder Companies. It trades about 0.0 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.06 per unit of risk. If you would invest  363.00  in MetaVia on October 4, 2024 and sell it today you would lose (152.00) from holding MetaVia or give up 41.87% of portfolio value over 90 days.

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

MetaVia  vs.  Estee Lauder Companies

MetaVia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Estee Lauder Companies

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with MetaVia and Estee Lauder

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

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.