Correlation Between Church Dwight and Eastern
Can any of the company-specific risk be diversified away by investing in both Church Dwight and Eastern 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 Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and Eastern Co, you can compare the effects of market volatilities on Church Dwight and Eastern 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 Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and Eastern.
Diversification Opportunities for Church Dwight and Eastern
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Church and Eastern is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Church Dwight i.e., Church Dwight and Eastern go up and down completely randomly.
Pair Corralation between Church Dwight and Eastern
Considering the 90-day investment horizon Church Dwight is expected to generate 0.52 times more return on investment than Eastern. However, Church Dwight is 1.94 times less risky than Eastern. It trades about 0.07 of its potential returns per unit of risk. Eastern Co is currently generating about -0.02 per unit of risk. If you would invest 10,501 in Church Dwight on August 31, 2024 and sell it today you would earn a total of 535.00 from holding Church Dwight or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Church Dwight vs. Eastern Co
Performance |
| Timeline |
| Church Dwight |
| Eastern |
Church Dwight and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Church Dwight and Eastern
The main advantage of trading using opposite Church Dwight and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| Church Dwight vs. Kimberly Clark | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Procter Gamble |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. Kennametal |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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