Correlation Between Colgate Palmolive and Sendas Distribuidora
Can any of the company-specific risk be diversified away by investing in both Colgate Palmolive and Sendas Distribuidora 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 Sendas Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colgate Palmolive and Sendas Distribuidora SA, you can compare the effects of market volatilities on Colgate Palmolive and Sendas Distribuidora 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 Sendas Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colgate Palmolive and Sendas Distribuidora.
Diversification Opportunities for Colgate Palmolive and Sendas Distribuidora
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Colgate and Sendas is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and Sendas Distribuidora SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sendas Distribuidora 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 Sendas Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sendas Distribuidora has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and Sendas Distribuidora go up and down completely randomly.
Pair Corralation between Colgate Palmolive and Sendas Distribuidora
Assuming the 90 days trading horizon Colgate Palmolive is expected to generate 0.55 times more return on investment than Sendas Distribuidora. However, Colgate Palmolive is 1.81 times less risky than Sendas Distribuidora. It trades about 0.13 of its potential returns per unit of risk. Sendas Distribuidora SA is currently generating about -0.08 per unit of risk. If you would invest 5,351 in Colgate Palmolive on September 2, 2024 and sell it today you would earn a total of 2,828 from holding Colgate Palmolive or generate 52.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Colgate Palmolive vs. Sendas Distribuidora SA
Performance |
| Timeline |
| Colgate Palmolive |
| Sendas Distribuidora |
Colgate Palmolive and Sendas Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colgate Palmolive and Sendas Distribuidora
The main advantage of trading using opposite Colgate Palmolive and Sendas Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colgate Palmolive position performs unexpectedly, Sendas Distribuidora 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 Sendas Distribuidora will offset losses from the drop in Sendas Distribuidora's long position.| Colgate Palmolive vs. Take Two Interactive Software | Colgate Palmolive vs. Deutsche Bank Aktiengesellschaft | Colgate Palmolive vs. Align Technology | Colgate Palmolive vs. Marvell Technology |
| Sendas Distribuidora vs. Companhia Brasileira de | Sendas Distribuidora vs. Atacado SA | Sendas Distribuidora vs. Pet Center Comrcio | Sendas Distribuidora vs. Natura Co Holding |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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