Correlation Between B3 SA and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both B3 SA 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 B3 SA and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B3 SA and The Procter Gamble, you can compare the effects of market volatilities on B3 SA 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 B3 SA with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of B3 SA and Procter Gamble.
Diversification Opportunities for B3 SA and Procter Gamble
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between B3SA3 and Procter is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding B3 SA and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and B3 SA 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 B3 SA 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 B3 SA i.e., B3 SA and Procter Gamble go up and down completely randomly.
Pair Corralation between B3 SA and Procter Gamble
Assuming the 90 days trading horizon B3 SA is expected to under-perform the Procter Gamble. In addition to that, B3 SA is 1.51 times more volatile than The Procter Gamble. It trades about -0.02 of its total potential returns per unit of risk. The Procter Gamble is currently generating about 0.06 per unit of volatility. If you would invest 5,531 in The Procter Gamble on August 31, 2024 and sell it today you would earn a total of 2,052 from holding The Procter Gamble or generate 37.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.75% |
| Values | Daily Returns |
B3 SA vs. The Procter Gamble
Performance |
| Timeline |
| B3 SA |
| Procter Gamble |
B3 SA and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B3 SA and Procter Gamble
The main advantage of trading using opposite B3 SA and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B3 SA 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.The idea behind B3 SA and The Procter Gamble 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.| Procter Gamble vs. METISA Metalrgica Timboense | Procter Gamble vs. Unity Software | Procter Gamble vs. Taiwan Semiconductor Manufacturing | Procter Gamble vs. American Airlines Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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