Correlation Between Clorox and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Clorox 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 Clorox and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Clorox and Procter Gamble, you can compare the effects of market volatilities on Clorox 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 Clorox with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clorox and Procter Gamble.
Diversification Opportunities for Clorox and Procter Gamble
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clorox and Procter is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding The Clorox and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Clorox 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 The Clorox 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 Clorox i.e., Clorox and Procter Gamble go up and down completely randomly.
Pair Corralation between Clorox and Procter Gamble
Considering the 90-day investment horizon The Clorox is expected to under-perform the Procter Gamble. But the stock apears to be less risky and, when comparing its historical volatility, The Clorox is 1.03 times less risky than Procter Gamble. The stock trades about -0.01 of its potential returns per unit of risk. The Procter Gamble is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 16,663 in Procter Gamble on November 1, 2024 and sell it today you would earn a total of 78.00 from holding Procter Gamble or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Clorox vs. Procter Gamble
Performance |
| Timeline |
| Clorox |
| Procter Gamble |
Clorox and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clorox and Procter Gamble
The main advantage of trading using opposite Clorox and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clorox 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.| Clorox vs. Colgate Palmolive | Clorox vs. Procter Gamble | Clorox vs. Unilever PLC ADR | Clorox vs. Church Dwight |
| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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