Correlation Between Clorox and Colgate Palmolive
Can any of the company-specific risk be diversified away by investing in both Clorox and Colgate Palmolive 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 Clorox and Colgate Palmolive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Clorox and Colgate Palmolive, you can compare the effects of market volatilities on Clorox and Colgate Palmolive 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 Clorox with a short position of Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clorox and Colgate Palmolive.
Diversification Opportunities for Clorox and Colgate Palmolive
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Clorox and Colgate is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding The Clorox and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and Clorox 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 The Clorox are associated (or correlated) with Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Clorox i.e., Clorox and Colgate Palmolive go up and down completely randomly.
Pair Corralation between Clorox and Colgate Palmolive
Considering the 90-day investment horizon The Clorox is expected to generate 1.26 times more return on investment than Colgate Palmolive. However, Clorox is 1.26 times more volatile than Colgate Palmolive. It trades about -0.1 of its potential returns per unit of risk. Colgate Palmolive is currently generating about -0.27 per unit of risk. If you would invest 16,413 in The Clorox on October 20, 2024 and sell it today you would lose (385.00) from holding The Clorox or give up 2.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Clorox vs. Colgate Palmolive
Performance |
| Timeline |
| Clorox |
| Colgate Palmolive |
Clorox and Colgate Palmolive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clorox and Colgate Palmolive
The main advantage of trading using opposite Clorox and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clorox position performs unexpectedly, Colgate Palmolive 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 Colgate Palmolive will offset losses from the drop in Colgate Palmolive's long position.| Clorox vs. Colgate Palmolive | Clorox vs. Procter Gamble | Clorox vs. Unilever PLC ADR | Clorox vs. Church Dwight |
| Colgate Palmolive vs. The Clorox | Colgate Palmolive vs. Procter Gamble | Colgate Palmolive vs. Unilever PLC ADR | Colgate Palmolive 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |