Correlation Between Edgewell Personal and Reckitt Benckiser
Can any of the company-specific risk be diversified away by investing in both Edgewell Personal and Reckitt Benckiser 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 Edgewell Personal and Reckitt Benckiser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgewell Personal Care and Reckitt Benckiser Group, you can compare the effects of market volatilities on Edgewell Personal and Reckitt Benckiser 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 Edgewell Personal with a short position of Reckitt Benckiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewell Personal and Reckitt Benckiser.
Diversification Opportunities for Edgewell Personal and Reckitt Benckiser
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Edgewell and Reckitt is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Edgewell Personal Care and Reckitt Benckiser Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reckitt Benckiser and Edgewell Personal 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 Edgewell Personal Care are associated (or correlated) with Reckitt Benckiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reckitt Benckiser has no effect on the direction of Edgewell Personal i.e., Edgewell Personal and Reckitt Benckiser go up and down completely randomly.
Pair Corralation between Edgewell Personal and Reckitt Benckiser
Considering the 90-day investment horizon Edgewell Personal Care is expected to generate 0.53 times more return on investment than Reckitt Benckiser. However, Edgewell Personal Care is 1.89 times less risky than Reckitt Benckiser. It trades about 0.02 of its potential returns per unit of risk. Reckitt Benckiser Group is currently generating about 0.01 per unit of risk. If you would invest 3,484 in Edgewell Personal Care on September 2, 2024 and sell it today you would earn a total of 174.00 from holding Edgewell Personal Care or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edgewell Personal Care vs. Reckitt Benckiser Group
Performance |
| Timeline |
| Edgewell Personal Care |
| Reckitt Benckiser |
Edgewell Personal and Reckitt Benckiser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgewell Personal and Reckitt Benckiser
The main advantage of trading using opposite Edgewell Personal and Reckitt Benckiser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewell Personal position performs unexpectedly, Reckitt Benckiser 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 Reckitt Benckiser will offset losses from the drop in Reckitt Benckiser's long position.| Edgewell Personal vs. Seneca Foods Corp | Edgewell Personal vs. Central Garden Pet | Edgewell Personal vs. Central Garden Pet | Edgewell Personal vs. Lifeway Foods |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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