Correlation Between Kimberly Clark and Henkel AG
Can any of the company-specific risk be diversified away by investing in both Kimberly Clark and Henkel AG 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 Henkel AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimberly Clark and Henkel AG Co, you can compare the effects of market volatilities on Kimberly Clark and Henkel AG 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 Henkel AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and Henkel AG.
Diversification Opportunities for Kimberly Clark and Henkel AG
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kimberly and Henkel is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark and Henkel AG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henkel AG 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 are associated (or correlated) with Henkel AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henkel AG has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and Henkel AG go up and down completely randomly.
Pair Corralation between Kimberly Clark and Henkel AG
Considering the 90-day investment horizon Kimberly Clark is expected to generate 6.09 times less return on investment than Henkel AG. But when comparing it to its historical volatility, Kimberly Clark is 1.1 times less risky than Henkel AG. It trades about 0.04 of its potential returns per unit of risk. Henkel AG Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,870 in Henkel AG Co on September 12, 2024 and sell it today you would earn a total of 91.00 from holding Henkel AG Co or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kimberly Clark vs. Henkel AG Co
Performance |
| Timeline |
| Kimberly Clark |
| Henkel AG |
Kimberly Clark and Henkel AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimberly Clark and Henkel AG
The main advantage of trading using opposite Kimberly Clark and Henkel AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimberly Clark position performs unexpectedly, Henkel AG 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 Henkel AG will offset losses from the drop in Henkel AG's long position.| Kimberly Clark vs. Colgate Palmolive | Kimberly Clark vs. Church Dwight | Kimberly Clark vs. Unilever PLC ADR | Kimberly Clark vs. Procter Gamble |
| Henkel AG vs. Essity AB | Henkel AG vs. Hengan International Group | Henkel AG vs. LOral SA | Henkel AG vs. Beiersdorf AG ADR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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