Correlation Between Colgate Palmolive and Healthy Choice
Can any of the company-specific risk be diversified away by investing in both Colgate Palmolive and Healthy Choice 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 Colgate Palmolive and Healthy Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colgate Palmolive and Healthy Choice Wellness, you can compare the effects of market volatilities on Colgate Palmolive and Healthy Choice 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 Colgate Palmolive with a short position of Healthy Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colgate Palmolive and Healthy Choice.
Diversification Opportunities for Colgate Palmolive and Healthy Choice
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Colgate and Healthy is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and Healthy Choice Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthy Choice Wellness and Colgate Palmolive 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 Colgate Palmolive are associated (or correlated) with Healthy Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthy Choice Wellness has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and Healthy Choice go up and down completely randomly.
Pair Corralation between Colgate Palmolive and Healthy Choice
Allowing for the 90-day total investment horizon Colgate Palmolive is expected to generate 0.06 times more return on investment than Healthy Choice. However, Colgate Palmolive is 17.71 times less risky than Healthy Choice. It trades about -0.25 of its potential returns per unit of risk. Healthy Choice Wellness is currently generating about -0.03 per unit of risk. If you would invest 9,294 in Colgate Palmolive on October 8, 2024 and sell it today you would lose (279.00) from holding Colgate Palmolive or give up 3.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Colgate Palmolive vs. Healthy Choice Wellness
Performance |
Timeline |
Colgate Palmolive |
Healthy Choice Wellness |
Colgate Palmolive and Healthy Choice Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Colgate Palmolive and Healthy Choice
The main advantage of trading using opposite Colgate Palmolive and Healthy Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colgate Palmolive position performs unexpectedly, Healthy Choice 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 Healthy Choice will offset losses from the drop in Healthy Choice's long position.Colgate Palmolive vs. Aquagold International | Colgate Palmolive vs. Alibaba Group Holding | Colgate Palmolive vs. Banco Bradesco SA | Colgate Palmolive vs. HP Inc |
Healthy Choice vs. Compania Cervecerias Unidas | Healthy Choice vs. Penn National Gaming | Healthy Choice vs. NanoTech Gaming | Healthy Choice vs. Boyd Gaming |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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