Correlation Between Kimberly Clark and Vanguard World

Can any of the company-specific risk be diversified away by investing in both Kimberly Clark and Vanguard World 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 World 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 World, you can compare the effects of market volatilities on Kimberly Clark and Vanguard World 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 World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and Vanguard World.

Diversification Opportunities for Kimberly Clark and Vanguard World

-0.13

Correlation Coefficient

Kimberly Clark  Vanguard World

Good diversification

The 3 months correlation between Kimberly and Vanguard is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark de Mxico and Vanguard World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard World 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 World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard World has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and Vanguard World go up and down completely randomly.

Pair Corralation between Kimberly Clark and Vanguard World

Assuming the 90 days trading horizon Kimberly Clark de Mxico is expected to under-perform the Vanguard World. In addition to that, Kimberly Clark is 1.5 times more volatile than Vanguard World. It trades about -0.02 of its total potential returns per unit of risk. Vanguard World is currently generating about 0.11 per unit of volatility. If you would invest  403,769  in Vanguard World on October 5, 2024 and sell it today you would earn a total of  122,232  from holding Vanguard World or generate 30.27% return on investment over 90 days.

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

Kimberly Clark de Mxico  vs.  Vanguard World

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 World

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Vanguard World is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kimberly Clark and Vanguard World

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

The idea behind Kimberly Clark de Mxico and Vanguard World 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.