Correlation Between Kimberly Clark and Clorox
Can any of the company-specific risk be diversified away by investing in both Kimberly Clark and Clorox 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 Clorox 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 The Clorox, you can compare the effects of market volatilities on Kimberly Clark and Clorox 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 Clorox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and Clorox.
Diversification Opportunities for Kimberly Clark and Clorox
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kimberly and Clorox is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark de Mexico and The Clorox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clorox 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 Clorox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clorox has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and Clorox go up and down completely randomly.
Pair Corralation between Kimberly Clark and Clorox
Assuming the 90 days horizon Kimberly Clark de Mexico is expected to under-perform the Clorox. In addition to that, Kimberly Clark is 1.45 times more volatile than The Clorox. It trades about 0.0 of its total potential returns per unit of risk. The Clorox is currently generating about 0.03 per unit of volatility. If you would invest 13,955 in The Clorox on August 24, 2024 and sell it today you would earn a total of 2,960 from holding The Clorox or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Kimberly Clark de Mexico vs. The Clorox
Performance |
| Timeline |
| Kimberly Clark de |
| Clorox |
Kimberly Clark and Clorox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimberly Clark and Clorox
The main advantage of trading using opposite Kimberly Clark and Clorox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimberly Clark position performs unexpectedly, Clorox 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 Clorox will offset losses from the drop in Clorox'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 |
| Clorox vs. Eshallgo Class A | Clorox vs. Amtech Systems | Clorox vs. Gold Fields Ltd | Clorox vs. Aegean Airlines 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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