Correlation Between Church Dwight and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Church Dwight and Unilever PLC 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 Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and Unilever PLC ADR, you can compare the effects of market volatilities on Church Dwight and Unilever PLC 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 Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and Unilever PLC.
Diversification Opportunities for Church Dwight and Unilever PLC
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Church and Unilever is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and Unilever PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC ADR 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC ADR has no effect on the direction of Church Dwight i.e., Church Dwight and Unilever PLC go up and down completely randomly.
Pair Corralation between Church Dwight and Unilever PLC
Considering the 90-day investment horizon Church Dwight is expected to generate 1.15 times more return on investment than Unilever PLC. However, Church Dwight is 1.15 times more volatile than Unilever PLC ADR. It trades about 0.05 of its potential returns per unit of risk. Unilever PLC ADR is currently generating about 0.06 per unit of risk. If you would invest 8,276 in Church Dwight on November 1, 2024 and sell it today you would earn a total of 2,436 from holding Church Dwight or generate 29.43% 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. Unilever PLC ADR
Performance |
| Timeline |
| Church Dwight |
| Unilever PLC ADR |
Church Dwight and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Church Dwight and Unilever PLC
The main advantage of trading using opposite Church Dwight and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.| Church Dwight vs. Kimberly Clark | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Procter Gamble |
| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
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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