Correlation Between Inter Parfums and Kimberly-Clark
Can any of the company-specific risk be diversified away by investing in both Inter Parfums 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 Inter Parfums and Kimberly-Clark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Parfums and Kimberly Clark de Mexico, you can compare the effects of market volatilities on Inter Parfums 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 Inter Parfums with a short position of Kimberly-Clark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Parfums and Kimberly-Clark.
Diversification Opportunities for Inter Parfums and Kimberly-Clark
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Inter and Kimberly-Clark is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums 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 Inter Parfums 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 Inter Parfums 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 Inter Parfums i.e., Inter Parfums and Kimberly-Clark go up and down completely randomly.
Pair Corralation between Inter Parfums and Kimberly-Clark
Given the investment horizon of 90 days Inter Parfums is expected to under-perform the Kimberly-Clark. But the stock apears to be less risky and, when comparing its historical volatility, Inter Parfums is 1.1 times less risky than Kimberly-Clark. The stock trades about -0.01 of its potential returns per unit of risk. The Kimberly Clark de Mexico is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 685.00 in Kimberly Clark de Mexico on December 5, 2024 and sell it today you would earn a total of 85.00 from holding Kimberly Clark de Mexico or generate 12.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Inter Parfums vs. Kimberly Clark de Mexico
Performance |
Timeline |
Inter Parfums |
Kimberly Clark de |
Inter Parfums and Kimberly-Clark Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Inter Parfums and Kimberly-Clark
The main advantage of trading using opposite Inter Parfums and Kimberly-Clark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Parfums 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.Inter Parfums vs. J J Snack | Inter Parfums vs. John B Sanfilippo | Inter Parfums vs. Innospec | Inter Parfums vs. Independent Bank |
Kimberly-Clark vs. Reckitt Benckiser Group | Kimberly-Clark vs. Church Dwight | Kimberly-Clark vs. LOreal Co ADR | Kimberly-Clark vs. Shiseido Company |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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