Correlation Between Estee Lauder and Burcon NutraScience

Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Burcon NutraScience 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 Burcon NutraScience 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 Burcon NutraScience Corp, you can compare the effects of market volatilities on Estee Lauder and Burcon NutraScience 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 Burcon NutraScience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Burcon NutraScience.

Diversification Opportunities for Estee Lauder and Burcon NutraScience

-0.61

Correlation Coefficient

Estee Lauder  Burcon NutraScience

Excellent diversification

The 3 months correlation between Estee and Burcon is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Burcon NutraScience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burcon NutraScience Corp 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 Burcon NutraScience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burcon NutraScience Corp has no effect on the direction of Estee Lauder i.e., Estee Lauder and Burcon NutraScience go up and down completely randomly.

Pair Corralation between Estee Lauder and Burcon NutraScience

If you would invest  8,473  in Estee Lauder Companies on September 14, 2024 and sell it today you would lose (351.00) from holding Estee Lauder Companies or give up 4.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Estee Lauder Companies  vs.  Burcon NutraScience Corp

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 quite persistent essential indicators, Estee Lauder is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Burcon NutraScience Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burcon NutraScience Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Burcon NutraScience is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Estee Lauder and Burcon NutraScience

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

The idea behind Estee Lauder Companies and Burcon NutraScience Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.