Correlation Between Estee Lauder and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Procter Gamble 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 Estee Lauder and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Estee Lauder Companies and Procter Gamble, you can compare the effects of market volatilities on Estee Lauder and Procter Gamble 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 Estee Lauder with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Procter Gamble.
Diversification Opportunities for Estee Lauder and Procter Gamble
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Estee and Procter is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Estee 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 Estee Lauder Companies are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Estee Lauder i.e., Estee Lauder and Procter Gamble go up and down completely randomly.
Pair Corralation between Estee Lauder and Procter Gamble
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to generate 3.19 times more return on investment than Procter Gamble. However, Estee Lauder is 3.19 times more volatile than Procter Gamble. It trades about -0.01 of its potential returns per unit of risk. Procter Gamble is currently generating about -0.13 per unit of risk. If you would invest 14,676 in Estee Lauder Companies on January 20, 2024 and sell it today you would lose (195.00) from holding Estee Lauder Companies or give up 1.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Estee Lauder Companies vs. Procter Gamble
Performance |
Timeline |
Estee Lauder Companies |
Procter Gamble |
Estee Lauder and Procter Gamble Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Estee Lauder and Procter Gamble
The main advantage of trading using opposite Estee Lauder and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.Estee Lauder vs. Seneca Foods Corp | Estee Lauder vs. Central Garden Pet | Estee Lauder vs. Central Garden Pet | Estee Lauder vs. Lifeway Foods |
Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
CEOs Directory Screen CEOs from public companies around the world | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |