Clorox's Poor Average Monthly Returns

Clorox makes household products such as wipes, sprays, and bleach (Exhibit 1). 

Exhibit 1: 

Source: Clorox Website

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:

Source: Data Provided by IEX Cloud, Author Calculations using Microsoft Excel

Exhibit 3:

Source: Data Provided by IEX Cloud, Author Calculations using Microsoft Excel

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:

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:   

Source: Data Provided by IEX Cloud, Author Calculations using Microsoft Excel, RStudio

Exhibit 6:

Source: Data Provided by IEX Cloud, Author Calculations using Microsoft Excel, RStudio