Correlation Between Colgate Palmolive and Lifevantage

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

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

Diversification Opportunities for Colgate Palmolive and Lifevantage

-0.69

Correlation Coefficient

Colgate Palmolive  Lifevantage

Excellent diversification

The 3 months correlation between Colgate and Lifevantage is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage 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 Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and Lifevantage go up and down completely randomly.

Pair Corralation between Colgate Palmolive and Lifevantage

Allowing for the 90-day total investment horizon Colgate Palmolive is expected to generate 8.89 times less return on investment than Lifevantage. But when comparing it to its historical volatility, Colgate Palmolive is 4.3 times less risky than Lifevantage. It trades about 0.03 of its potential returns per unit of risk. Lifevantage is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  398.00  in Lifevantage on February 3, 2025 and sell it today you would earn a total of  793.00  from holding Lifevantage or generate 199.25% return on investment over 90 days.

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

Colgate Palmolive  vs.  Lifevantage

Colgate Palmolive

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Colgate Palmolive are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Colgate Palmolive is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Lifevantage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifevantage 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 basic indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Colgate Palmolive and Lifevantage

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

The idea behind Colgate Palmolive and Lifevantage 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.