Correlation Between Nu Skin and Estee Lauder

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Can any of the company-specific risk be diversified away by investing in both Nu Skin 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 Nu Skin and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Skin Enterprises and Estee Lauder Companies, you can compare the effects of market volatilities on Nu Skin 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 Nu Skin with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Skin and Estee Lauder.

Diversification Opportunities for Nu Skin and Estee Lauder

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nu Skin and Estee is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nu Skin Enterprises 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 Nu Skin 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 Nu Skin Enterprises 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 Nu Skin i.e., Nu Skin and Estee Lauder go up and down completely randomly.

Pair Corralation between Nu Skin and Estee Lauder

Considering the 90-day investment horizon Nu Skin Enterprises is expected to generate 0.73 times more return on investment than Estee Lauder. However, Nu Skin Enterprises is 1.36 times less risky than Estee Lauder. It trades about 0.31 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about 0.21 per unit of risk. If you would invest  3,514  in Nu Skin Enterprises on September 8, 2022 and sell it today you would earn a total of  621.00  from holding Nu Skin Enterprises or generate 17.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Nu Skin Enterprises  vs.  Estee Lauder Companies

 Performance (%) 
       Timeline  
Nu Skin Enterprises 
Nu Skin Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nu Skin Enterprises are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Nu Skin may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Nu Skin Price Channel

Estee Lauder Companies 
Estee Performance
0 of 100
Over the last 90 days Estee Lauder Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady essential indicators, Estee Lauder is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Estee Price Channel

Nu Skin and Estee Lauder Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nu Skin and Estee Lauder

The main advantage of trading using opposite Nu Skin and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Skin 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.
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The idea behind Nu Skin Enterprises and Estee Lauder Companies 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.
Estee Lauder vs. Starbucks
Estee Lauder vs. Goldman Sachs Group
Estee Lauder vs. COMSovereign Holding Corp
Estee Lauder vs. Procter Gamble
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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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