Correlation Between Kimberly Clark and Vanguard Bond

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

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

Diversification Opportunities for Kimberly Clark and Vanguard Bond

-0.43

Correlation Coefficient

Kimberly Clark  Vanguard Bond

Very good diversification

The 3 months correlation between Kimberly and Vanguard is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark de Mxico and Vanguard Bond Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Bond Index and Kimberly Clark 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 Kimberly Clark de Mxico are associated (or correlated) with Vanguard Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Bond Index has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and Vanguard Bond go up and down completely randomly.

Pair Corralation between Kimberly Clark and Vanguard Bond

Assuming the 90 days trading horizon Kimberly Clark de Mxico is expected to under-perform the Vanguard Bond. But the stock apears to be less risky and, when comparing its historical volatility, Kimberly Clark de Mxico is 1.28 times less risky than Vanguard Bond. The stock trades about -0.02 of its potential returns per unit of risk. The Vanguard Bond Index is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  122,137  in Vanguard Bond Index on October 5, 2024 and sell it today you would earn a total of  30,163  from holding Vanguard Bond Index or generate 24.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.23%
Values	Daily Returns

Kimberly Clark de Mxico  vs.  Vanguard Bond Index

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark de Mxico has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Vanguard Bond Index

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Bond Index are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Vanguard Bond may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kimberly Clark and Vanguard Bond

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

The idea behind Kimberly Clark de Mxico and Vanguard Bond Index 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.