Correlation Between Church Dwight and Henkel AG
Can any of the company-specific risk be diversified away by investing in both Church Dwight and Henkel AG 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 Henkel AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and Henkel AG Co, you can compare the effects of market volatilities on Church Dwight and Henkel AG 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 Henkel AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and Henkel AG.
Diversification Opportunities for Church Dwight and Henkel AG
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Church and Henkel is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and Henkel AG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henkel AG 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 Henkel AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henkel AG has no effect on the direction of Church Dwight i.e., Church Dwight and Henkel AG go up and down completely randomly.
Pair Corralation between Church Dwight and Henkel AG
Considering the 90-day investment horizon Church Dwight is expected to generate 1.02 times more return on investment than Henkel AG. However, Church Dwight is 1.02 times more volatile than Henkel AG Co. It trades about 0.05 of its potential returns per unit of risk. Henkel AG Co is currently generating about 0.03 per unit of risk. If you would invest 9,261 in Church Dwight on September 4, 2024 and sell it today you would earn a total of 1,863 from holding Church Dwight or generate 20.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Church Dwight vs. Henkel AG Co
Performance |
| Timeline |
| Church Dwight |
| Henkel AG |
Church Dwight and Henkel AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Church Dwight and Henkel AG
The main advantage of trading using opposite Church Dwight and Henkel AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight position performs unexpectedly, Henkel AG 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 Henkel AG will offset losses from the drop in Henkel AG's long position.| Church Dwight vs. The Clorox | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Kimberly Clark |
| Henkel AG vs. LOreal Co ADR | Henkel AG vs. Unilever PLC ADR | Henkel AG vs. Kimberly Clark | Henkel AG vs. The Clorox |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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