Correlation Between Sprott Focus and Kimberly-Clark

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

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

Diversification Opportunities for Sprott Focus and Kimberly-Clark

0.21

Correlation Coefficient

Sprott Focus  Kimberly-Clark

Modest diversification

The 3 months correlation between Sprott and Kimberly-Clark is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and Kimberly Clark de Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de and Sprott Focus 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 Sprott Focus Trust 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 Sprott Focus i.e., Sprott Focus and Kimberly-Clark go up and down completely randomly.

Pair Corralation between Sprott Focus and Kimberly-Clark

Given the investment horizon of 90 days Sprott Focus is expected to generate 4.58 times less return on investment than Kimberly-Clark. But when comparing it to its historical volatility, Sprott Focus Trust is 1.95 times less risky than Kimberly-Clark. It trades about 0.07 of its potential returns per unit of risk. Kimberly Clark de Mexico is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  706.00  in Kimberly Clark de Mexico on December 28, 2024 and sell it today you would earn a total of  117.00  from holding Kimberly Clark de Mexico or generate 16.57% return on investment over 90 days.

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

Sprott Focus Trust  vs.  Kimberly Clark de Mexico

Sprott Focus Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Focus Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Sprott Focus is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Kimberly Clark de

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kimberly Clark de Mexico are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, Kimberly-Clark showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Focus and Kimberly-Clark

The main advantage of trading using opposite Sprott Focus and Kimberly-Clark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Focus 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 Sprott Focus Trust and Kimberly Clark de Mexico 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.