Correlation Between Clorox and Kenvue
Can any of the company-specific risk be diversified away by investing in both Clorox and Kenvue 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 Kenvue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Clorox and Kenvue Inc, you can compare the effects of market volatilities on Clorox and Kenvue 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 Kenvue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clorox and Kenvue.
Diversification Opportunities for Clorox and Kenvue
Poor diversification
The 3 months correlation between Clorox and Kenvue is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Clorox and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of Clorox i.e., Clorox and Kenvue go up and down completely randomly.
Pair Corralation between Clorox and Kenvue
Considering the 90-day investment horizon The Clorox is expected to under-perform the Kenvue. In addition to that, Clorox is 1.29 times more volatile than Kenvue Inc. It trades about -0.01 of its total potential returns per unit of risk. Kenvue Inc is currently generating about 0.07 per unit of volatility. If you would invest 2,135 in Kenvue Inc on November 1, 2024 and sell it today you would earn a total of 27.00 from holding Kenvue Inc or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Clorox vs. Kenvue Inc
Performance |
| Timeline |
| Clorox |
| Kenvue Inc |
Clorox and Kenvue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clorox and Kenvue
The main advantage of trading using opposite Clorox and Kenvue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clorox position performs unexpectedly, Kenvue 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 Kenvue will offset losses from the drop in Kenvue's long position.| Clorox vs. Colgate Palmolive | Clorox vs. Procter Gamble | Clorox vs. Unilever PLC ADR | Clorox vs. Church Dwight |
| Kenvue vs. Highway Holdings Limited | Kenvue vs. Emerson Electric | Kenvue vs. Topbuild Corp | Kenvue vs. Hurco Companies |
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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