Correlation Between Acme United and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Acme United and Procter Gamble 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 Acme United and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Procter Gamble, you can compare the effects of market volatilities on Acme United and Procter Gamble 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 Acme United with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Procter Gamble.
Diversification Opportunities for Acme United and Procter Gamble
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Acme and Procter is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Acme United 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 Acme United are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Acme United i.e., Acme United and Procter Gamble go up and down completely randomly.
Pair Corralation between Acme United and Procter Gamble
Considering the 90-day investment horizon Acme United is expected to generate 1.6 times more return on investment than Procter Gamble. However, Acme United is 1.6 times more volatile than Procter Gamble. It trades about 0.26 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.19 per unit of risk. If you would invest 4,050 in Acme United on August 28, 2024 and sell it today you would earn a total of 425.00 from holding Acme United or generate 10.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acme United vs. Procter Gamble
Performance |
| Timeline |
| Acme United |
| Procter Gamble |
Acme United and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acme United and Procter Gamble
The main advantage of trading using opposite Acme United and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.| Acme United vs. Mannatech Incorporated | Acme United vs. Inter Parfums | Acme United vs. Nu Skin Enterprises | Acme United vs. Procter Gamble |
| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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