Correlation Between BlackRock and Kimberly Clark

Can any of the company-specific risk be diversified away by investing in both BlackRock and Kimberly Clark 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 BlackRock and Kimberly Clark into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock and Kimberly Clark de Mxico, you can compare the effects of market volatilities on BlackRock and Kimberly Clark 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 BlackRock with a short position of Kimberly Clark. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and Kimberly Clark.

Diversification Opportunities for BlackRock and Kimberly Clark

-0.54

Correlation Coefficient

BlackRock  Kimberly Clark

Excellent diversification

The 3 months correlation between BlackRock and Kimberly is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Kimberly Clark de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de and BlackRock 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 BlackRock are associated (or correlated) with Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of BlackRock i.e., BlackRock and Kimberly Clark go up and down completely randomly.

Pair Corralation between BlackRock and Kimberly Clark

Assuming the 90 days trading horizon BlackRock is expected to generate 1.09 times more return on investment than Kimberly Clark. However, BlackRock is 1.09 times more volatile than Kimberly Clark de Mxico. It trades about 0.15 of its potential returns per unit of risk. Kimberly Clark de Mxico is currently generating about -0.08 per unit of risk. If you would invest  1,808,101  in BlackRock on October 7, 2024 and sell it today you would earn a total of  261,899  from holding BlackRock or generate 14.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

BlackRock  vs.  Kimberly Clark de Mxico

BlackRock

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BlackRock showed solid returns over the last few months and may actually be approaching a breakup point.

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark de Mxico has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with BlackRock and Kimberly Clark

The main advantage of trading using opposite BlackRock and Kimberly Clark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock position performs unexpectedly, Kimberly Clark 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 Kimberly Clark will offset losses from the drop in Kimberly Clark's long position.

The idea behind BlackRock and Kimberly Clark de Mxico pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.