Correlation Between United Guardian and Colgate Palmolive

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

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

Diversification Opportunities for United Guardian and Colgate Palmolive

-0.74

Correlation Coefficient

United Guardian  Colgate Palmolive

Pay attention - limited upside

The 3 months correlation between United and Colgate is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and United Guardian 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 United Guardian 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 United Guardian i.e., United Guardian and Colgate Palmolive go up and down completely randomly.

Pair Corralation between United Guardian and Colgate Palmolive

Allowing for the 90-day total investment horizon United Guardian is expected to generate 1.42 times more return on investment than Colgate Palmolive. However, United Guardian is 1.42 times more volatile than Colgate Palmolive. It trades about 0.09 of its potential returns per unit of risk. Colgate Palmolive is currently generating about -0.05 per unit of risk. If you would invest  925.00  in United Guardian on November 27, 2024 and sell it today you would earn a total of  81.00  from holding United Guardian or generate 8.76% return on investment over 90 days.

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

United Guardian  vs.  Colgate Palmolive

United Guardian

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Guardian are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, United Guardian may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Colgate Palmolive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Colgate Palmolive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Colgate Palmolive is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with United Guardian and Colgate Palmolive

The main advantage of trading using opposite United Guardian and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian 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 United Guardian 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.