Correlation Between Estee Lauder and Union Pacific

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

Diversification Opportunities for Estee Lauder and Union Pacific

0.0

Correlation Coefficient

Estee Lauder  Union Pacific

Pay attention - limited upside

The 3 months correlation between Estee and Union is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Union Pacific Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Pacific Resources 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 Union Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Pacific Resources has no effect on the direction of Estee Lauder i.e., Estee Lauder and Union Pacific go up and down completely randomly.

Pair Corralation between Estee Lauder and Union Pacific

If you would invest (100.00) in Union Pacific Resources on September 24, 2024 and sell it today you would earn a total of  100.00  from holding Union Pacific Resources or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Estee Lauder Companies  vs.  Union Pacific Resources

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Union Pacific Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Pacific Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Union Pacific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Estee Lauder and Union Pacific

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

The idea behind Estee Lauder Companies and Union Pacific Resources 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.