Correlation Between Estee Lauder and Alkaline Water

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

Diversification Opportunities for Estee Lauder and Alkaline Water

-0.71

Correlation Coefficient

Estee Lauder  Alkaline Water

Pay attention - limited upside

The 3 months correlation between Estee and Alkaline is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Alkaline Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkaline Water 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 Alkaline Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkaline Water has no effect on the direction of Estee Lauder i.e., Estee Lauder and Alkaline Water go up and down completely randomly.

Pair Corralation between Estee Lauder and Alkaline Water

If you would invest  6,652  in Estee Lauder Companies on September 22, 2024 and sell it today you would earn a total of  784.00  from holding Estee Lauder Companies or generate 11.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Estee Lauder Companies  vs.  Alkaline Water

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 latest unsteady performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Alkaline Water

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Estee Lauder and Alkaline Water

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

The idea behind Estee Lauder Companies and Alkaline Water 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.