Correlation Between Hilton Grand and Church Dwight

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

By analyzing existing cross correlation between Hilton Grand Vacations and Church Dwight, you can compare the effects of market volatilities on Hilton Grand and Church Dwight 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 Hilton Grand with a short position of Church Dwight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Grand and Church Dwight.

Diversification Opportunities for Hilton Grand and Church Dwight

0.4

Correlation Coefficient

Hilton Grand  Church Dwight

Very weak diversification

The 3 months correlation between Hilton and Church is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Grand Vacations and Church Dwight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight and Hilton Grand 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 Hilton Grand Vacations are associated (or correlated) with Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of Hilton Grand i.e., Hilton Grand and Church Dwight go up and down completely randomly.

Pair Corralation between Hilton Grand and Church Dwight

Considering the 90-day investment horizon Hilton Grand Vacations is expected to under-perform the Church Dwight. In addition to that, Hilton Grand is 2.44 times more volatile than Church Dwight. It trades about -0.07 of its total potential returns per unit of risk. Church Dwight is currently generating about 0.19 per unit of volatility. If you would invest  10,042  in Church Dwight on January 27, 2024 and sell it today you would earn a total of  683.00  from holding Church Dwight or generate 6.8% return on investment over 90 days.

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

Hilton Grand Vacations  vs.  Church Dwight

Hilton Grand Vacations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Grand Vacations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Hilton Grand is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Church Dwight

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Church Dwight are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Church Dwight may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Hilton Grand and Church Dwight

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

The idea behind Hilton Grand Vacations and Church Dwight 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.