Correlation Between Cable One and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Cable One 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 Cable One and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and The Procter Gamble, you can compare the effects of market volatilities on Cable One 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 Cable One with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Procter Gamble.
Diversification Opportunities for Cable One and Procter Gamble
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cable and Procter is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Cable One 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 Cable One 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 Cable One i.e., Cable One and Procter Gamble go up and down completely randomly.
Pair Corralation between Cable One and Procter Gamble
Assuming the 90 days trading horizon Cable One is expected to generate 1.0 times more return on investment than Procter Gamble. However, Cable One is 1.0 times more volatile than The Procter Gamble. It trades about 0.11 of its potential returns per unit of risk. The Procter Gamble is currently generating about 0.02 per unit of risk. If you would invest 981.00 in Cable One on October 26, 2024 and sell it today you would earn a total of 103.00 from holding Cable One or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.28% |
| Values | Daily Returns |
Cable One vs. The Procter Gamble
Performance |
| Timeline |
| Cable One |
| Procter Gamble |
Cable One and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and Procter Gamble
The main advantage of trading using opposite Cable One and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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.| Cable One vs. GX AI TECH | Cable One vs. Palantir Technologies | Cable One vs. United Natural Foods, | Cable One vs. Vulcan Materials |
| Procter Gamble vs. Raytheon Technologies | Procter Gamble vs. BIONTECH SE DRN | Procter Gamble vs. Burlington Stores, | Procter Gamble vs. Trane Technologies plc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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