Correlation Between European Wax and Reckitt Benckiser
Can any of the company-specific risk be diversified away by investing in both European Wax 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 European Wax and Reckitt Benckiser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and Reckitt Benckiser Group, you can compare the effects of market volatilities on European Wax 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 European Wax with a short position of Reckitt Benckiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Reckitt Benckiser.
Diversification Opportunities for European Wax and Reckitt Benckiser
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between European and Reckitt is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Reckitt Benckiser Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reckitt Benckiser and European Wax 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 European Wax Center 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 European Wax i.e., European Wax and Reckitt Benckiser go up and down completely randomly.
Pair Corralation between European Wax and Reckitt Benckiser
Given the investment horizon of 90 days European Wax Center is expected to under-perform the Reckitt Benckiser. In addition to that, European Wax is 2.02 times more volatile than Reckitt Benckiser Group. It trades about -0.07 of its total potential returns per unit of risk. Reckitt Benckiser Group is currently generating about -0.03 per unit of volatility. If you would invest 6,302 in Reckitt Benckiser Group on August 28, 2024 and sell it today you would lose (202.00) from holding Reckitt Benckiser Group or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. Reckitt Benckiser Group
Performance |
| Timeline |
| European Wax Center |
| Reckitt Benckiser |
European Wax and Reckitt Benckiser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and Reckitt Benckiser
The main advantage of trading using opposite European Wax and Reckitt Benckiser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax 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.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
| Reckitt Benckiser vs. Church Dwight | Reckitt Benckiser vs. Kimberly Clark de Mexico | Reckitt Benckiser vs. LOreal Co ADR | Reckitt Benckiser vs. Shiseido Company |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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