Correlation Between United Guardian and Clorox

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

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

Diversification Opportunities for United Guardian and Clorox

-0.51

Correlation Coefficient

United Guardian  Clorox

Excellent diversification

The 3 months correlation between United and Clorox is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and The Clorox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clorox 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 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 United Guardian i.e., United Guardian and Clorox go up and down completely randomly.

Pair Corralation between United Guardian and Clorox

Allowing for the 90-day total investment horizon United Guardian is expected to under-perform the Clorox. In addition to that, United Guardian is 4.56 times more volatile than The Clorox. It trades about -0.26 of its total potential returns per unit of risk. The Clorox is currently generating about 0.09 per unit of volatility. If you would invest  16,166  in The Clorox on August 30, 2024 and sell it today you would earn a total of  549.00  from holding The Clorox or generate 3.4% return on investment over 90 days.

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

United Guardian  vs.  The Clorox

United Guardian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Guardian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Clorox

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Clorox are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Clorox may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with United Guardian and Clorox

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

The idea behind United Guardian and The Clorox 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.