Correlation Between Kimberly Clark and Church Dwight
Can any of the company-specific risk be diversified away by investing in both Kimberly Clark and Church Dwight 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 Kimberly Clark and Church Dwight into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimberly Clark de Mexico and Church Dwight, you can compare the effects of market volatilities on Kimberly Clark and Church Dwight 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 Kimberly Clark with a short position of Church Dwight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and Church Dwight.
Diversification Opportunities for Kimberly Clark and Church Dwight
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kimberly and Church is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark de Mexico and Church Dwight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight and Kimberly Clark 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 Kimberly Clark de Mexico are associated (or correlated) with Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and Church Dwight go up and down completely randomly.
Pair Corralation between Kimberly Clark and Church Dwight
Assuming the 90 days horizon Kimberly Clark de Mexico is expected to under-perform the Church Dwight. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kimberly Clark de Mexico is 1.06 times less risky than Church Dwight. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Church Dwight is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 10,078 in Church Dwight on August 28, 2024 and sell it today you would earn a total of 963.00 from holding Church Dwight or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kimberly Clark de Mexico vs. Church Dwight
Performance |
| Timeline |
| Kimberly Clark de |
| Church Dwight |
Kimberly Clark and Church Dwight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimberly Clark and Church Dwight
The main advantage of trading using opposite Kimberly Clark and Church Dwight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimberly Clark position performs unexpectedly, Church Dwight 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 Church Dwight will offset losses from the drop in Church Dwight's long position.| Kimberly Clark vs. Reckitt Benckiser Group | Kimberly Clark vs. Church Dwight | Kimberly Clark vs. LOreal Co ADR | Kimberly Clark vs. Shiseido Company |
| Church Dwight vs. Kimberly Clark | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Procter Gamble |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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