Correlation Between Chemours and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Chemours 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 Chemours and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Procter Gamble, you can compare the effects of market volatilities on Chemours 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 Chemours with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Procter Gamble.
Diversification Opportunities for Chemours and Procter Gamble
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chemours and Procter is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Chemours 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 Chemours Co 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 Chemours i.e., Chemours and Procter Gamble go up and down completely randomly.
Pair Corralation between Chemours and Procter Gamble
Allowing for the 90-day total investment horizon Chemours Co is expected to generate 3.68 times more return on investment than Procter Gamble. However, Chemours is 3.68 times more volatile than Procter Gamble. It trades about 0.22 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.28 per unit of risk. If you would invest 1,805 in Chemours Co on August 30, 2024 and sell it today you would earn a total of 377.00 from holding Chemours Co or generate 20.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Procter Gamble
Performance |
| Timeline |
| Chemours |
| Procter Gamble |
Chemours and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Procter Gamble
The main advantage of trading using opposite Chemours and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours 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.| Chemours vs. International Flavors Fragrances | Chemours vs. Air Products and | Chemours vs. PPG Industries | Chemours vs. Linde plc Ordinary |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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