Correlation Between Church Dwight and Reckitt Benckiser
Can any of the company-specific risk be diversified away by investing in both Church Dwight and Reckitt Benckiser 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 Reckitt Benckiser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and Reckitt Benckiser Group, you can compare the effects of market volatilities on Church Dwight and Reckitt Benckiser 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 Reckitt Benckiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and Reckitt Benckiser.
Diversification Opportunities for Church Dwight and Reckitt Benckiser
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Church and Reckitt is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and Reckitt Benckiser Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reckitt Benckiser 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 Reckitt Benckiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reckitt Benckiser has no effect on the direction of Church Dwight i.e., Church Dwight and Reckitt Benckiser go up and down completely randomly.
Pair Corralation between Church Dwight and Reckitt Benckiser
Considering the 90-day investment horizon Church Dwight is expected to generate 2.78 times less return on investment than Reckitt Benckiser. In addition to that, Church Dwight is 1.04 times more volatile than Reckitt Benckiser Group. It trades about 0.12 of its total potential returns per unit of risk. Reckitt Benckiser Group is currently generating about 0.34 per unit of volatility. If you would invest 5,931 in Reckitt Benckiser Group on November 2, 2024 and sell it today you would earn a total of 560.00 from holding Reckitt Benckiser Group or generate 9.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Church Dwight vs. Reckitt Benckiser Group
Performance |
| Timeline |
| Church Dwight |
| Reckitt Benckiser |
Church Dwight and Reckitt Benckiser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Church Dwight and Reckitt Benckiser
The main advantage of trading using opposite Church Dwight and Reckitt Benckiser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight position performs unexpectedly, Reckitt Benckiser 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 Reckitt Benckiser will offset losses from the drop in Reckitt Benckiser's long position.| Church Dwight vs. Kimberly Clark | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Procter Gamble |
| Reckitt Benckiser vs. Church Dwight | Reckitt Benckiser vs. Kimberly Clark de Mexico | Reckitt Benckiser vs. LOreal Co ADR | Reckitt Benckiser vs. Shiseido Company |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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