Correlation Between Kimberly Clark and Kenvue

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

By analyzing existing cross correlation between Kimberly Clark and Kenvue Inc, you can compare the effects of market volatilities on Kimberly Clark and Kenvue 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 Kenvue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and Kenvue.

Diversification Opportunities for Kimberly Clark and Kenvue

-0.45

Correlation Coefficient

Kimberly Clark  Kenvue

Very good diversification

The 3 months correlation between Kimberly and Kenvue is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and Kenvue go up and down completely randomly.

Pair Corralation between Kimberly Clark and Kenvue

Considering the 90-day investment horizon Kimberly Clark is expected to under-perform the Kenvue. But the stock apears to be less risky and, when comparing its historical volatility, Kimberly Clark is 1.28 times less risky than Kenvue. The stock trades about -0.04 of its potential returns per unit of risk. The Kenvue Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,176  in Kenvue Inc on August 30, 2024 and sell it today you would earn a total of  237.00  from holding Kenvue Inc or generate 10.89% return on investment over 90 days.

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

Kimberly Clark  vs.  Kenvue Inc

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.

Kenvue Inc

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kenvue Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Kenvue may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Kimberly Clark and Kenvue

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

The idea behind Kimberly Clark and Kenvue Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.