Clorox makes household products such as wipes, sprays, and bleach (Exhibit 1).
Exhibit 1:
Over the past decade, Clorox has underperformed compared to the S&P 500 Index. An analysis of the monthly returns of Clorox and the Vanguard S&P 500 Index ETF between June 2019 and January 2023 shows that Clorox continued its poor performance. Clorox's monthly return averaged 0.1%, while the Vanguard S&P 500 Index returned 1% (Exhibits 2 & 3). Even the third quartile average monthly return of 3.2% of Clorox fell below the 4.8% returned by the Vanguard S&P 500 Index ETF (Exhibits 2 & 3).
Exhibit 2:
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiu_fqpJ5wTNPB1zn2B4-CcopNiyprfHDy48WJdcb_SQHQXm_bKOAtdSwfqNFszT54mgmIAVwKu4pym3nNncxH9c1I6FnCm8Nn69fgNWRbumIDb4I1iM43s5GQkwYs9asLwiLFaHl5yiK0t0GpJ09DqO8K2cCtf6r1mU0YI8vl9suT-0XHffMsz315P/w400-h188/Screen%20Shot%202023-02-06%20at%208.24.28%20PM.png) |
Source: Data Provided by IEX Cloud, Author Calculations using Microsoft Excel |
Exhibit 3:
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiR21weM1zZWFKpJGTiYeZos114O0_5y1rAF2FgbmdjwnAz9OQqCp-1hSeFlOnpagEARZg6DR1zdP7X5yv8ma3-1yJF68UhqUEzzq7vyD4ueOiLw0HJJy8t4tL5dwL8c0Ciw_ASP8Gk62saS3IlYbqPKBIiw5CrabIQsKOjKlrOSDJ3aBEuz9VSmEi8/w400-h188/Screen%20Shot%202023-02-06%20at%208.24.39%20PM.png) |
Source: Data Provided by IEX Cloud, Author Calculations using Microsoft Excel
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The monthly returns of Clorox and the Vanguard S&P 500 Index ETF between June 2019 and January 2023 show a low correlation of 0.24. A rolling correlation of the monthly returns conducted using RStudio shows a low positive correlation of 0.02 between August 2020 and July 2021 (Exhibit 4).
Exhibit 4:
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhacLCs5AzbAqE0JfvVzas9jkdhczF2StvELLY859wH239YHMyjz1iXfDsqXKHLng1AUlzyo8QcTspFNqvVa0fjvyQNyyz8dpa12Gmq9GgJsdaSbP4V2ZEl06FQfg-fN35FsIzVu0fcb9k0gQjvb2EsQzgazlIXBGWKXUzN0ljz26Hp1HCGTA0obgEb/w400-h233/Screen%20Shot%202023-02-06%20at%208.46.42%20PM.png) |
Source: Data Provided by IEX Cloud, Author Calculations using Microsoft Excel, RStudio |
A linear regression of the monthly returns shows a very low beta of 0.25 for Clorox. But, the p-value of 0.1 shows that the relationship may not be significant at the 95% confidence interval. Call:
lm(formula = CLX_Monthly_Return ~ VOO_Monthly_Return, data = VOOandCLX)
Residuals:
Min 1Q Median 3Q Max
-0.141038 -0.033613 0.000236 0.036959 0.120780
Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept) -0.001581 0.008864 -0.178 0.859
VOO_Monthly_Return 0.252497 0.153777 1.642 0.108
Residual standard error: 0.05781 on 42 degrees of freedom
Multiple R-squared: 0.06032, Adjusted R-squared: 0.03795
F-statistic: 2.696 on 1 and 42 DF, p-value: 0.1081
Here's the graph of the monthly returns of the Vanguard S&P 500 Index ETF and Clorox (Exhibit 5) and the residuals plot from the linear regression (Exhibit 6).
Exhibit 5:
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEix1D_8N1b6YsMB_16RTo9BVBRBQiqqty0TO_WULp_LuWprgZdXkvQ66wk9Ab3XJNGdZHmxKYjlMdwZ4dMggz8HEQuBTd5oUcvgZfQX8s6ODWOfpzLq5lux2yITwfzUHynvtqTQy7XOtEgDuw0fQfNV16c2f28-HMqpNKiHJ17IjuWZ9J9mRscLLHKx/w400-h294/VOO_CLX_Monthly_Returns.jpeg) |
Source: Data Provided by IEX Cloud, Author Calculations using Microsoft Excel, RStudio |
Exhibit 6:
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfEgZ3GMzfT2ZfeX3z8aYWvs5y_hW-Y7x6qsljeC0QSgqFJJW_JI-raDP5KmKyNn4OF8RFyFpK4AQspd_cfWa4ph_ab26skyQL4X9OKZYo7VwhzFhIkqkZz3wSqzaBZ6U_DbBoNYB9o55cbZrk0nMeAs11NMcM7oT_PYaS9qqJQnBwl3qy1UFMRHR-/w400-h294/Residuals_of_Monthly_Returns_Of_CLX_From_LM.jpeg) |
Source: Data Provided by IEX Cloud, Author Calculations using Microsoft Excel, RStudio |