Correlation Between Church Dwight and Dana
Can any of the company-specific risk be diversified away by investing in both Church Dwight and Dana 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 Church Dwight and Dana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and Dana Inc, you can compare the effects of market volatilities on Church Dwight and Dana 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 Church Dwight with a short position of Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and Dana.
Diversification Opportunities for Church Dwight and Dana
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Church and Dana is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Church Dwight 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 Church Dwight are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Church Dwight i.e., Church Dwight and Dana go up and down completely randomly.
Pair Corralation between Church Dwight and Dana
Considering the 90-day investment horizon Church Dwight is expected to generate 0.42 times more return on investment than Dana. However, Church Dwight is 2.37 times less risky than Dana. It trades about 0.06 of its potential returns per unit of risk. Dana Inc is currently generating about -0.02 per unit of risk. If you would invest 8,038 in Church Dwight on August 31, 2024 and sell it today you would earn a total of 2,998 from holding Church Dwight or generate 37.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Church Dwight vs. Dana Inc
Performance |
| Timeline |
| Church Dwight |
| Dana Inc |
Church Dwight and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Church Dwight and Dana
The main advantage of trading using opposite Church Dwight and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.| Church Dwight vs. Kimberly Clark | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight 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 the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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