Correlation Between Edgewell Personal and Tower Semiconductor

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

By analyzing existing cross correlation between Edgewell Personal Care and Tower Semiconductor, you can compare the effects of market volatilities on Edgewell Personal and Tower Semiconductor 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 Edgewell Personal with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewell Personal and Tower Semiconductor.

Diversification Opportunities for Edgewell Personal and Tower Semiconductor

0.57

Correlation Coefficient

Edgewell Personal  Tower Semiconductor

Very weak diversification

The 3 months correlation between Edgewell and Tower is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Edgewell Personal Care and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and Edgewell Personal 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 Edgewell Personal Care are associated (or correlated) with Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Edgewell Personal i.e., Edgewell Personal and Tower Semiconductor go up and down completely randomly.

Pair Corralation between Edgewell Personal and Tower Semiconductor

Considering the 90-day investment horizon Edgewell Personal Care is expected to generate 0.6 times more return on investment than Tower Semiconductor. However, Edgewell Personal Care is 1.65 times less risky than Tower Semiconductor. It trades about -0.11 of its potential returns per unit of risk. Tower Semiconductor is currently generating about -0.13 per unit of risk. If you would invest  3,395  in Edgewell Personal Care on December 20, 2024 and sell it today you would lose (436.00) from holding Edgewell Personal Care or give up 12.84% of portfolio value over 90 days.

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

Edgewell Personal Care  vs.  Tower Semiconductor

Edgewell Personal Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edgewell Personal Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Tower Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tower Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Edgewell Personal and Tower Semiconductor

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

The idea behind Edgewell Personal Care and Tower Semiconductor 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.