Correlation Between Clorox and Henkel AG
Can any of the company-specific risk be diversified away by investing in both Clorox and Henkel AG 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 Henkel AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Clorox and Henkel AG Co, you can compare the effects of market volatilities on Clorox and Henkel AG 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 Henkel AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clorox and Henkel AG.
Diversification Opportunities for Clorox and Henkel AG
Good diversification
The 3 months correlation between Clorox and Henkel is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Clorox and Henkel AG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henkel AG 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 Henkel AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henkel AG has no effect on the direction of Clorox i.e., Clorox and Henkel AG go up and down completely randomly.
Pair Corralation between Clorox and Henkel AG
Considering the 90-day investment horizon The Clorox is expected to generate 0.7 times more return on investment than Henkel AG. However, The Clorox is 1.42 times less risky than Henkel AG. It trades about 0.03 of its potential returns per unit of risk. Henkel AG Co is currently generating about 0.02 per unit of risk. If you would invest 13,955 in The Clorox on August 26, 2024 and sell it today you would earn a total of 2,975 from holding The Clorox or generate 21.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.98% |
| Values | Daily Returns |
The Clorox vs. Henkel AG Co
Performance |
| Timeline |
| Clorox |
| Henkel AG |
Clorox and Henkel AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clorox and Henkel AG
The main advantage of trading using opposite Clorox and Henkel AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clorox position performs unexpectedly, Henkel AG 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 Henkel AG will offset losses from the drop in Henkel AG's long position.| Clorox vs. Unilever PLC ADR | Clorox vs. Estee Lauder Companies | Clorox vs. ELF Beauty | Clorox vs. Coty Inc |
| Henkel AG vs. LOreal Co ADR | Henkel AG vs. Unilever PLC ADR | Henkel AG vs. Kimberly Clark | Henkel AG vs. The Clorox |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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