Correlation Between Energizer Holdings and Colgate Palmolive
Can any of the company-specific risk be diversified away by investing in both Energizer Holdings 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 Energizer Holdings and Colgate Palmolive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energizer Holdings and Colgate Palmolive, you can compare the effects of market volatilities on Energizer Holdings 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 Energizer Holdings with a short position of Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energizer Holdings and Colgate Palmolive.
Diversification Opportunities for Energizer Holdings and Colgate Palmolive
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Energizer and Colgate is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Energizer Holdings and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and Energizer Holdings 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 Energizer Holdings 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 Energizer Holdings i.e., Energizer Holdings and Colgate Palmolive go up and down completely randomly.
Pair Corralation between Energizer Holdings and Colgate Palmolive
Considering the 90-day investment horizon Energizer Holdings is expected to generate 1.57 times more return on investment than Colgate Palmolive. However, Energizer Holdings is 1.57 times more volatile than Colgate Palmolive. It trades about 0.4 of its potential returns per unit of risk. Colgate Palmolive is currently generating about -0.01 per unit of risk. If you would invest 3,277 in Energizer Holdings on August 28, 2024 and sell it today you would earn a total of 600.00 from holding Energizer Holdings or generate 18.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energizer Holdings vs. Colgate Palmolive
Performance |
| Timeline |
| Energizer Holdings |
| Colgate Palmolive |
Energizer Holdings and Colgate Palmolive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energizer Holdings and Colgate Palmolive
The main advantage of trading using opposite Energizer Holdings and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energizer Holdings 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.| Energizer Holdings vs. Acuity Brands | Energizer Holdings vs. Espey Mfg Electronics | Energizer Holdings vs. Preformed Line Products | Energizer Holdings vs. Kimball Electronics |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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