Correlation Between Colgate Palmolive and Kimberly Clark
Can any of the company-specific risk be diversified away by investing in both Colgate Palmolive and Kimberly Clark 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 Colgate Palmolive and Kimberly Clark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colgate Palmolive and Kimberly Clark, you can compare the effects of market volatilities on Colgate Palmolive and Kimberly Clark 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 Colgate Palmolive with a short position of Kimberly Clark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colgate Palmolive and Kimberly Clark.
Diversification Opportunities for Colgate Palmolive and Kimberly Clark
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Colgate and Kimberly is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and Kimberly Clark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark and Colgate Palmolive 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 Colgate Palmolive are associated (or correlated) with Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and Kimberly Clark go up and down completely randomly.
Pair Corralation between Colgate Palmolive and Kimberly Clark
Allowing for the 90-day total investment horizon Colgate Palmolive is expected to generate 2.01 times less return on investment than Kimberly Clark. But when comparing it to its historical volatility, Colgate Palmolive is 1.08 times less risky than Kimberly Clark. It trades about 0.03 of its potential returns per unit of risk. Kimberly Clark is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,695 in Kimberly Clark on August 24, 2024 and sell it today you would earn a total of 1,008 from holding Kimberly Clark or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Colgate Palmolive vs. Kimberly Clark
Performance |
| Timeline |
| Colgate Palmolive |
| Kimberly Clark |
Colgate Palmolive and Kimberly Clark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colgate Palmolive and Kimberly Clark
The main advantage of trading using opposite Colgate Palmolive and Kimberly Clark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colgate Palmolive position performs unexpectedly, Kimberly Clark 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 Kimberly Clark will offset losses from the drop in Kimberly Clark's long position.| Colgate Palmolive vs. The Clorox | Colgate Palmolive vs. Procter Gamble | Colgate Palmolive vs. Unilever PLC ADR | Colgate Palmolive vs. Church Dwight |
| Kimberly Clark vs. Colgate Palmolive | Kimberly Clark vs. Estee Lauder Companies | Kimberly Clark vs. Procter Gamble | Kimberly Clark vs. United Guardian |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |