Correlation Between Reckitt Benckiser and Clorox
Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser and Clorox 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 Reckitt Benckiser and Clorox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reckitt Benckiser Group and The Clorox, you can compare the effects of market volatilities on Reckitt Benckiser and Clorox 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 Reckitt Benckiser with a short position of Clorox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and Clorox.
Diversification Opportunities for Reckitt Benckiser and Clorox
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Reckitt and Clorox is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group and The Clorox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clorox and Reckitt Benckiser 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 Reckitt Benckiser Group are associated (or correlated) with Clorox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clorox has no effect on the direction of Reckitt Benckiser i.e., Reckitt Benckiser and Clorox go up and down completely randomly.
Pair Corralation between Reckitt Benckiser and Clorox
Assuming the 90 days horizon Reckitt Benckiser Group is expected to generate 1.35 times more return on investment than Clorox. However, Reckitt Benckiser is 1.35 times more volatile than The Clorox. It trades about 0.1 of its potential returns per unit of risk. The Clorox is currently generating about -0.08 per unit of risk. If you would invest 6,050 in Reckitt Benckiser Group on December 5, 2024 and sell it today you would earn a total of 617.00 from holding Reckitt Benckiser Group or generate 10.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 93.22% |
Values | Daily Returns |
Reckitt Benckiser Group vs. The Clorox
Performance |
Timeline |
Reckitt Benckiser |
Clorox |
Reckitt Benckiser and Clorox Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Reckitt Benckiser and Clorox
The main advantage of trading using opposite Reckitt Benckiser and Clorox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reckitt Benckiser position performs unexpectedly, Clorox 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 Clorox will offset losses from the drop in Clorox's long position.Reckitt Benckiser vs. Church Dwight | Reckitt Benckiser vs. Kimberly Clark de Mexico | Reckitt Benckiser vs. LOreal Co ADR | Reckitt Benckiser vs. Shiseido Company |
Clorox vs. Colgate Palmolive | Clorox vs. Procter Gamble | Clorox vs. Unilever PLC ADR | Clorox vs. Church Dwight |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
Stocks Directory Find actively traded stocks across global markets | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |