Correlation Between Church Dwight and Integral

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

By analyzing existing cross correlation between Church Dwight and Integral Ad Science, you can compare the effects of market volatilities on Church Dwight and Integral 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 Church Dwight with a short position of Integral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and Integral.

Diversification Opportunities for Church Dwight and Integral

0.07

Correlation Coefficient

Church Dwight  Integral

Significant diversification

The 3 months correlation between Church and Integral is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and Integral Ad Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integral Ad Science and Church Dwight 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 Church Dwight are associated (or correlated) with Integral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integral Ad Science has no effect on the direction of Church Dwight i.e., Church Dwight and Integral go up and down completely randomly.

Pair Corralation between Church Dwight and Integral

Considering the 90-day investment horizon Church Dwight is expected to generate 1.37 times less return on investment than Integral. But when comparing it to its historical volatility, Church Dwight is 3.22 times less risky than Integral. It trades about 0.05 of its potential returns per unit of risk. Integral Ad Science is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  983.00  in Integral Ad Science on October 12, 2024 and sell it today you would lose (4.00) from holding Integral Ad Science or give up 0.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Church Dwight  vs.  Integral Ad Science

Church Dwight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Church Dwight has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Church Dwight is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Integral Ad Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integral Ad Science has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Integral is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Church Dwight and Integral

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

The idea behind Church Dwight and Integral Ad Science 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.