Correlation Between Colgate Palmolive and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both Colgate Palmolive and Inter Parfums 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 Colgate Palmolive and Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colgate Palmolive and Inter Parfums, you can compare the effects of market volatilities on Colgate Palmolive and Inter Parfums 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 Colgate Palmolive with a short position of Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colgate Palmolive and Inter Parfums.
Diversification Opportunities for Colgate Palmolive and Inter Parfums
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Colgate and Inter is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums and Colgate Palmolive 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 Colgate Palmolive are associated (or correlated) with Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and Inter Parfums go up and down completely randomly.
Pair Corralation between Colgate Palmolive and Inter Parfums
Allowing for the 90-day total investment horizon Colgate Palmolive is expected to under-perform the Inter Parfums. But the stock apears to be less risky and, when comparing its historical volatility, Colgate Palmolive is 2.01 times less risky than Inter Parfums. The stock trades about -0.05 of its potential returns per unit of risk. The Inter Parfums is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,842 in Inter Parfums on May 1, 2025 and sell it today you would earn a total of 1,451 from holding Inter Parfums or generate 13.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Colgate Palmolive vs. Inter Parfums
Performance |
Timeline |
Colgate Palmolive |
Inter Parfums |
Colgate Palmolive and Inter Parfums Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Colgate Palmolive and Inter Parfums
The main advantage of trading using opposite Colgate Palmolive and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colgate Palmolive position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.Colgate Palmolive vs. The Clorox | Colgate Palmolive vs. Procter Gamble | Colgate Palmolive vs. Unilever PLC ADR | Colgate Palmolive vs. Church Dwight |
Inter Parfums vs. J J Snack | Inter Parfums vs. John B Sanfilippo | Inter Parfums vs. Innospec | Inter Parfums vs. Independent Bank |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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