Correlation Between Kimberly Clark and Estee Lauder

Can any of the company-specific risk be diversified away by investing in both Kimberly Clark 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 Kimberly Clark and Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kimberly Clark and Estee Lauder Companies, you can compare the effects of market volatilities on Kimberly Clark 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 Kimberly Clark with a short position of Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and Estee Lauder.

Diversification Opportunities for Kimberly Clark and Estee Lauder

-0.63

Correlation Coefficient

Kimberly Clark  Estee Lauder

Excellent diversification

The 3 months correlation between Kimberly and Estee is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark 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 Kimberly Clark 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 Kimberly Clark 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 Kimberly Clark i.e., Kimberly Clark and Estee Lauder go up and down completely randomly.

Pair Corralation between Kimberly Clark and Estee Lauder

Considering the 90-day investment horizon Kimberly Clark is expected to under-perform the Estee Lauder. But the stock apears to be less risky and, when comparing its historical volatility, Kimberly Clark is 2.2 times less risky than Estee Lauder. The stock trades about 0.0 of its potential returns per unit of risk. The Estee Lauder Companies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  5,823  in Estee Lauder Companies on May 6, 2025 and sell it today you would earn a total of  3,281  from holding Estee Lauder Companies or generate 56.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Kimberly Clark  vs.  Estee Lauder Companies

Kimberly Clark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kimberly Clark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Kimberly Clark is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Estee Lauder Companies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Estee Lauder Companies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Estee Lauder disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kimberly Clark and Estee Lauder

The main advantage of trading using opposite Kimberly Clark and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimberly Clark 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.

The idea behind Kimberly Clark 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.