Correlation Between Kimberly Clark and Edgewell Personal

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

By analyzing existing cross correlation between Kimberly Clark and Edgewell Personal Care, you can compare the effects of market volatilities on Kimberly Clark and Edgewell Personal 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 Kimberly Clark with a short position of Edgewell Personal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and Edgewell Personal.

Diversification Opportunities for Kimberly Clark and Edgewell Personal

0.11

Correlation Coefficient

Kimberly Clark  Edgewell Personal

Average diversification

The 3 months correlation between Kimberly and Edgewell is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care and Kimberly Clark 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 Kimberly Clark are associated (or correlated) with Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and Edgewell Personal go up and down completely randomly.

Pair Corralation between Kimberly Clark and Edgewell Personal

If you would invest  3,436  in Edgewell Personal Care on September 25, 2024 and sell it today you would lose (17.00) from holding Edgewell Personal Care or give up 0.49% of portfolio value over 90 days.

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

Kimberly Clark  vs.  Edgewell Personal Care

Kimberly Clark

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Kimberly Clark is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Edgewell Personal Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edgewell Personal Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Edgewell Personal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kimberly Clark and Edgewell Personal

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

The idea behind Kimberly Clark and Edgewell Personal Care 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.