Correlation Between Mondelez International and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Mondelez International and Estee Lauder 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 Mondelez International and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mondelez International and Estee Lauder Companies, you can compare the effects of market volatilities on Mondelez International and Estee Lauder 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 Mondelez International with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mondelez International and Estee Lauder.
Diversification Opportunities for Mondelez International and Estee Lauder
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mondelez and Estee is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mondelez International and Estee Lauder Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estee Lauder Companies and Mondelez International 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 Mondelez International are associated (or correlated) with Estee Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estee Lauder Companies has no effect on the direction of Mondelez International i.e., Mondelez International and Estee Lauder go up and down completely randomly.
Pair Corralation between Mondelez International and Estee Lauder
Given the investment horizon of 90 days Mondelez International is expected to generate 0.45 times more return on investment than Estee Lauder. However, Mondelez International is 2.22 times less risky than Estee Lauder. It trades about 0.03 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.02 per unit of risk. If you would invest 6,224 in Mondelez International on January 25, 2024 and sell it today you would earn a total of 851.00 from holding Mondelez International or generate 13.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mondelez International vs. Estee Lauder Companies
Performance |
| Timeline |
| Mondelez International |
| Estee Lauder Companies |
Mondelez International and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mondelez International and Estee Lauder
The main advantage of trading using opposite Mondelez International and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mondelez International position performs unexpectedly, Estee Lauder 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 Estee Lauder will offset losses from the drop in Estee Lauder's long position.| Mondelez International vs. Bunge Limited | Mondelez International vs. Archer Daniels Midland | Mondelez International vs. Fresh Del Monte | Mondelez International vs. Limoneira Co |
| Estee Lauder vs. Procter Gamble | Estee Lauder vs. Colgate Palmolive | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. European Wax Center |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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