Correlation Between Colgate Palmolive and Identiv
Can any of the company-specific risk be diversified away by investing in both Colgate Palmolive and Identiv 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 Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colgate Palmolive and Identiv, you can compare the effects of market volatilities on Colgate Palmolive and Identiv 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 Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colgate Palmolive and Identiv.
Diversification Opportunities for Colgate Palmolive and Identiv
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Colgate and Identiv is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv 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 Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and Identiv go up and down completely randomly.
Pair Corralation between Colgate Palmolive and Identiv
Assuming the 90 days horizon Colgate Palmolive is expected to generate 0.45 times more return on investment than Identiv. However, Colgate Palmolive is 2.25 times less risky than Identiv. It trades about -0.04 of its potential returns per unit of risk. Identiv is currently generating about -0.03 per unit of risk. If you would invest 8,764 in Colgate Palmolive on November 1, 2024 and sell it today you would lose (119.00) from holding Colgate Palmolive or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Colgate Palmolive vs. Identiv
Performance |
| Timeline |
| Colgate Palmolive |
| Identiv |
Colgate Palmolive and Identiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colgate Palmolive and Identiv
The main advantage of trading using opposite Colgate Palmolive and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colgate Palmolive position performs unexpectedly, Identiv 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 Identiv will offset losses from the drop in Identiv's long position.| Colgate Palmolive vs. COMBA TELECOM SYST | Colgate Palmolive vs. Cars Inc | Colgate Palmolive vs. Chunghwa Telecom Co | Colgate Palmolive vs. Clean Energy Fuels |
| Identiv vs. Soken Chemical Engineering | Identiv vs. Eastman Chemical | Identiv vs. INDO RAMA SYNTHETIC | Identiv vs. Telecom Argentina SA |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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