Correlation Between Kimberly Clark and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Kimberly Clark and Unilever PLC 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 Unilever PLC 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 Unilever PLC, you can compare the effects of market volatilities on Kimberly Clark and Unilever PLC 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 Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and Unilever PLC.
Diversification Opportunities for Kimberly Clark and Unilever PLC
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kimberly and Unilever is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark de Mexico and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and Unilever PLC go up and down completely randomly.
Pair Corralation between Kimberly Clark and Unilever PLC
Assuming the 90 days horizon Kimberly Clark de Mexico is expected to generate 0.41 times more return on investment than Unilever PLC. However, Kimberly Clark de Mexico is 2.46 times less risky than Unilever PLC. It trades about -0.17 of its potential returns per unit of risk. Unilever PLC is currently generating about -0.08 per unit of risk. If you would invest 721.00 in Kimberly Clark de Mexico on August 28, 2024 and sell it today you would lose (35.00) from holding Kimberly Clark de Mexico or give up 4.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Kimberly Clark de Mexico vs. Unilever PLC
Performance |
| Timeline |
| Kimberly Clark de |
| Unilever PLC |
Kimberly Clark and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimberly Clark and Unilever PLC
The main advantage of trading using opposite Kimberly Clark and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimberly Clark position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC'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 |
| Unilever PLC vs. LOreal Co ADR | Unilever PLC vs. Estee Lauder Companies | Unilever PLC vs. Church Dwight | Unilever PLC vs. LOral 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |