Correlation Between Estee Lauder and Dingdong Limited
Can any of the company-specific risk be diversified away by investing in both Estee Lauder and Dingdong Limited 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 Dingdong Limited 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 Dingdong Limited ADR, you can compare the effects of market volatilities on Estee Lauder and Dingdong Limited 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 Dingdong Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Dingdong Limited.
Diversification Opportunities for Estee Lauder and Dingdong Limited
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Estee and Dingdong is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Dingdong Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dingdong Limited ADR 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 Dingdong Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dingdong Limited ADR has no effect on the direction of Estee Lauder i.e., Estee Lauder and Dingdong Limited go up and down completely randomly.
Pair Corralation between Estee Lauder and Dingdong Limited
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to generate 0.92 times more return on investment than Dingdong Limited. However, Estee Lauder Companies is 1.09 times less risky than Dingdong Limited. It trades about 0.19 of its potential returns per unit of risk. Dingdong Limited ADR is currently generating about 0.04 per unit of risk. If you would invest 6,719 in Estee Lauder Companies on June 5, 2025 and sell it today you would earn a total of 2,360 from holding Estee Lauder Companies or generate 35.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Dingdong Limited ADR
Performance |
| Timeline |
| Estee Lauder Companies |
| Dingdong Limited ADR |
Estee Lauder and Dingdong Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Dingdong Limited
The main advantage of trading using opposite Estee Lauder and Dingdong Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder position performs unexpectedly, Dingdong Limited 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 Dingdong Limited will offset losses from the drop in Dingdong Limited's long position.| Estee Lauder vs. Colgate Palmolive | Estee Lauder vs. Coty Inc | Estee Lauder vs. ELF Beauty | Estee Lauder vs. Kenvue Inc |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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