Correlation Between Avon Products and Colgate Palmolive
Can any of the company-specific risk be diversified away by investing in both Avon Products 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 Avon Products and Colgate Palmolive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avon Products and Colgate Palmolive, you can compare the effects of market volatilities on Avon Products 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 Avon Products with a short position of Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avon Products and Colgate Palmolive.
Diversification Opportunities for Avon Products and Colgate Palmolive
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Avon and Colgate is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Avon Products and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and Avon Products 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 Avon Products 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 Avon Products i.e., Avon Products and Colgate Palmolive go up and down completely randomly.
Pair Corralation between Avon Products and Colgate Palmolive
If you would invest 8,308 in Colgate Palmolive on February 11, 2024 and sell it today you would earn a total of 1,202 from holding Colgate Palmolive or generate 14.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Avon Products vs. Colgate Palmolive
Performance |
Timeline |
Avon Products |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Colgate Palmolive |
Avon Products and Colgate Palmolive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Avon Products and Colgate Palmolive
The main advantage of trading using opposite Avon Products and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avon Products 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.Avon Products vs. Avient Corp | Avon Products vs. Flexible Solutions International | Avon Products vs. Valhi Inc | Avon Products vs. Pyrophyte Acquisition Corp |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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