Correlation Between Kimberly Clark and Newell Brands

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

By analyzing existing cross correlation between Kimberly Clark and Newell Brands, you can compare the effects of market volatilities on Kimberly Clark and Newell Brands 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 Newell Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and Newell Brands.

Diversification Opportunities for Kimberly Clark and Newell Brands

-0.87

Correlation Coefficient

Kimberly Clark  Newell Brands

Pay attention - limited upside

The 3 months correlation between Kimberly and Newell is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark and Newell Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newell Brands 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 are associated (or correlated) with Newell Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newell Brands has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and Newell Brands go up and down completely randomly.

Pair Corralation between Kimberly Clark and Newell Brands

Considering the 90-day investment horizon Kimberly Clark is expected to generate 0.29 times more return on investment than Newell Brands. However, Kimberly Clark is 3.41 times less risky than Newell Brands. It trades about 0.12 of its potential returns per unit of risk. Newell Brands is currently generating about -0.16 per unit of risk. If you would invest  12,946  in Kimberly Clark on December 28, 2024 and sell it today you would earn a total of  1,125  from holding Kimberly Clark or generate 8.69% return on investment over 90 days.

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

Kimberly Clark  vs.  Newell Brands

Kimberly Clark

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kimberly Clark are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Kimberly Clark may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Newell Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newell Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kimberly Clark and Newell Brands

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

The idea behind Kimberly Clark and Newell Brands 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.