Correlation Between Church Dwight and WD 40

Can any of the company-specific risk be diversified away by investing in both Church Dwight and WD 40 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 Church Dwight and WD 40 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Church Dwight and WD 40 Company, you can compare the effects of market volatilities on Church Dwight and WD 40 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 Church Dwight with a short position of WD 40. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and WD 40.

Diversification Opportunities for Church Dwight and WD 40

0.7

Correlation Coefficient

Church Dwight  WD 40

Poor diversification

The 3 months correlation between Church and WDFC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and WD 40 Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WD 40 Company and Church Dwight 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 Church Dwight are associated (or correlated) with WD 40. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WD 40 Company has no effect on the direction of Church Dwight i.e., Church Dwight and WD 40 go up and down completely randomly.

Pair Corralation between Church Dwight and WD 40

Considering the 90-day investment horizon Church Dwight is expected to under-perform the WD 40. But the stock apears to be less risky and, when comparing its historical volatility, Church Dwight is 1.01 times less risky than WD 40. The stock trades about -0.14 of its potential returns per unit of risk. The WD 40 Company is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  21,177  in WD 40 Company on September 11, 2025 and sell it today you would lose (2,425) from holding WD 40 Company or give up 11.45% of portfolio value over 90 days.

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

Church Dwight  vs.  WD 40 Company

Church Dwight

Risk-Adjusted Performance

Weakest

Over the last 90 days Church Dwight has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2026. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

WD 40 Company

Risk-Adjusted Performance

Weakest

Over the last 90 days WD 40 Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Church Dwight and WD 40

The main advantage of trading using opposite Church Dwight and WD 40 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight position performs unexpectedly, WD 40 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 WD 40 will offset losses from the drop in WD 40's long position.

The idea behind Church Dwight and WD 40 Company 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.