Correlation Between Estee Lauder and Mannatech Incorporated

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

Diversification Opportunities for Estee Lauder and Mannatech Incorporated

-0.19

Correlation Coefficient

Estee Lauder  Mannatech Incorporated

Good diversification

The 3 months correlation between Estee and Mannatech is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Mannatech Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mannatech Incorporated 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 Mannatech Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mannatech Incorporated has no effect on the direction of Estee Lauder i.e., Estee Lauder and Mannatech Incorporated go up and down completely randomly.

Pair Corralation between Estee Lauder and Mannatech Incorporated

Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Mannatech Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, Estee Lauder Companies is 1.3 times less risky than Mannatech Incorporated. The stock trades about -0.02 of its potential returns per unit of risk. The Mannatech Incorporated is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  756.00  in Mannatech Incorporated on September 17, 2024 and sell it today you would earn a total of  287.00  from holding Mannatech Incorporated or generate 37.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Estee Lauder Companies  vs.  Mannatech Incorporated

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 newest stock price mess, may contribute to short-term losses for the institutional investors.

Mannatech Incorporated

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mannatech Incorporated are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Mannatech Incorporated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Estee Lauder and Mannatech Incorporated

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

The idea behind Estee Lauder Companies and Mannatech Incorporated 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.