Correlation Between Old Republic and Church Dwight
Can any of the company-specific risk be diversified away by investing in both Old Republic and Church Dwight 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 Old Republic and Church Dwight into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Church Dwight, you can compare the effects of market volatilities on Old Republic and Church Dwight 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 Old Republic with a short position of Church Dwight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Church Dwight.
Diversification Opportunities for Old Republic and Church Dwight
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Church is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Church Dwight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight and Old Republic 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 Old Republic International are associated (or correlated) with Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of Old Republic i.e., Old Republic and Church Dwight go up and down completely randomly.
Pair Corralation between Old Republic and Church Dwight
Considering the 90-day investment horizon Old Republic International is expected to generate 0.96 times more return on investment than Church Dwight. However, Old Republic International is 1.05 times less risky than Church Dwight. It trades about 0.13 of its potential returns per unit of risk. Church Dwight is currently generating about 0.05 per unit of risk. If you would invest 3,414 in Old Republic International on December 17, 2024 and sell it today you would earn a total of 336.00 from holding Old Republic International or generate 9.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Old Republic International vs. Church Dwight
Performance |
Timeline |
Old Republic Interna |
Church Dwight |
Old Republic and Church Dwight Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Old Republic and Church Dwight
The main advantage of trading using opposite Old Republic and Church Dwight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic position performs unexpectedly, Church Dwight 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 Church Dwight will offset losses from the drop in Church Dwight's long position.Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
Church Dwight vs. Kimberly Clark | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Procter Gamble |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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