Correlation Between Colgate Palmolive and Mannatech Incorporated
Can any of the company-specific risk be diversified away by investing in both Colgate Palmolive and Mannatech Incorporated 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 Mannatech Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colgate Palmolive and Mannatech Incorporated, you can compare the effects of market volatilities on Colgate Palmolive and Mannatech Incorporated 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 Mannatech Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colgate Palmolive and Mannatech Incorporated.
Diversification Opportunities for Colgate Palmolive and Mannatech Incorporated
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Colgate and Mannatech is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and Mannatech Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mannatech Incorporated 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 Mannatech Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mannatech Incorporated has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and Mannatech Incorporated go up and down completely randomly.
Pair Corralation between Colgate Palmolive and Mannatech Incorporated
Allowing for the 90-day total investment horizon Colgate Palmolive is expected to generate 31.35 times less return on investment than Mannatech Incorporated. But when comparing it to its historical volatility, Colgate Palmolive is 46.93 times less risky than Mannatech Incorporated. It trades about 0.06 of its potential returns per unit of risk. Mannatech Incorporated is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,083 in Mannatech Incorporated on August 28, 2024 and sell it today you would lose (1,295) from holding Mannatech Incorporated or give up 62.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.34% |
| Values | Daily Returns |
Colgate Palmolive vs. Mannatech Incorporated
Performance |
| Timeline |
| Colgate Palmolive |
| Mannatech Incorporated |
Colgate Palmolive and Mannatech Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colgate Palmolive and Mannatech Incorporated
The main advantage of trading using opposite Colgate Palmolive and Mannatech Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colgate Palmolive position performs unexpectedly, Mannatech Incorporated 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 Mannatech Incorporated will offset losses from the drop in Mannatech Incorporated's long position.| Colgate Palmolive vs. The Clorox | Colgate Palmolive vs. Procter Gamble | Colgate Palmolive vs. Unilever PLC ADR | Colgate Palmolive vs. Church Dwight |
| Mannatech Incorporated vs. Edgewell Personal Care | Mannatech Incorporated vs. Inter Parfums | Mannatech Incorporated vs. Nu Skin Enterprises | Mannatech Incorporated vs. Helen of Troy |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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