Correlation Between Church Dwight and LOral SA
Can any of the company-specific risk be diversified away by investing in both Church Dwight and LOral SA 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 LOral SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and LOral SA, you can compare the effects of market volatilities on Church Dwight and LOral SA 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 LOral SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and LOral SA.
Diversification Opportunities for Church Dwight and LOral SA
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Church and LOral is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and LOral SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOral SA 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 LOral SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOral SA has no effect on the direction of Church Dwight i.e., Church Dwight and LOral SA go up and down completely randomly.
Pair Corralation between Church Dwight and LOral SA
Considering the 90-day investment horizon Church Dwight is expected to generate 0.54 times more return on investment than LOral SA. However, Church Dwight is 1.86 times less risky than LOral SA. It trades about 0.03 of its potential returns per unit of risk. LOral SA is currently generating about -0.13 per unit of risk. If you would invest 10,712 in Church Dwight on September 3, 2024 and sell it today you would earn a total of 301.00 from holding Church Dwight or generate 2.81% 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. LOral SA
Performance |
| Timeline |
| Church Dwight |
| LOral SA |
Church Dwight and LOral SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Church Dwight and LOral SA
The main advantage of trading using opposite Church Dwight and LOral SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight position performs unexpectedly, LOral SA 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 LOral SA will offset losses from the drop in LOral SA's long position.| Church Dwight vs. Highway Holdings Limited | Church Dwight vs. QCR Holdings | Church Dwight vs. Partner Communications | Church Dwight vs. Acumen Pharmaceuticals |
| LOral SA vs. Inter Parfums | LOral SA vs. European Wax Center | LOral SA vs. Estee Lauder Companies | LOral SA vs. Reckitt Benckiser Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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