Correlation Between Central Garden and Clorox
Can any of the company-specific risk be diversified away by investing in both Central Garden and Clorox 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 Central Garden and Clorox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Garden Pet and The Clorox, you can compare the effects of market volatilities on Central Garden and Clorox 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 Central Garden with a short position of Clorox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Clorox.
Diversification Opportunities for Central Garden and Clorox
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Central and Clorox is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and The Clorox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clorox and Central Garden 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 Central Garden Pet are associated (or correlated) with Clorox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clorox has no effect on the direction of Central Garden i.e., Central Garden and Clorox go up and down completely randomly.
Pair Corralation between Central Garden and Clorox
Assuming the 90 days horizon Central Garden Pet is expected to under-perform the Clorox. In addition to that, Central Garden is 1.46 times more volatile than The Clorox. It trades about -0.07 of its total potential returns per unit of risk. The Clorox is currently generating about 0.2 per unit of volatility. If you would invest 12,680 in The Clorox on August 24, 2024 and sell it today you would earn a total of 4,235 from holding The Clorox or generate 33.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Garden Pet vs. The Clorox
Performance |
| Timeline |
| Central Garden Pet |
| Clorox |
Central Garden and Clorox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Clorox
The main advantage of trading using opposite Central Garden and Clorox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, Clorox 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 Clorox will offset losses from the drop in Clorox's long position.| Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack | Central Garden vs. John B Sanfilippo |
| Clorox vs. Honest Company | Clorox vs. Hims Hers Health | Clorox vs. Kimberly Clark | Clorox vs. Colgate Palmolive |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |