Correlation Between Stephan and Colgate Palmolive

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

By analyzing existing cross correlation between The Stephan Co and Colgate Palmolive, you can compare the effects of market volatilities on Stephan and Colgate Palmolive 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 Stephan with a short position of Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stephan and Colgate Palmolive.

Diversification Opportunities for Stephan and Colgate Palmolive

-0.47

Correlation Coefficient

Stephan  Colgate Palmolive

Very good diversification

The 3 months correlation between Stephan and Colgate is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Stephan Co and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and Stephan 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 The Stephan Co are associated (or correlated) with Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Stephan i.e., Stephan and Colgate Palmolive go up and down completely randomly.

Pair Corralation between Stephan and Colgate Palmolive

If you would invest  164.00  in The Stephan Co on September 17, 2024 and sell it today you would earn a total of  0.00  from holding The Stephan Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

The Stephan Co  vs.  Colgate Palmolive

The Stephan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Stephan Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Stephan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Colgate Palmolive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colgate Palmolive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Stephan and Colgate Palmolive

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

The idea behind The Stephan Co and Colgate Palmolive 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.