Correlation Between Telefonaktiebolaget and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget 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 Telefonaktiebolaget and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonaktiebolaget LM Ericsson and The Procter Gamble, you can compare the effects of market volatilities on Telefonaktiebolaget 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 Telefonaktiebolaget with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Procter Gamble.
Diversification Opportunities for Telefonaktiebolaget and Procter Gamble
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Telefonaktiebolaget and Procter is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Telefonaktiebolaget 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 Telefonaktiebolaget LM Ericsson 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 Telefonaktiebolaget i.e., Telefonaktiebolaget and Procter Gamble go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Procter Gamble
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 1.36 times more return on investment than Procter Gamble. However, Telefonaktiebolaget is 1.36 times more volatile than The Procter Gamble. It trades about 0.32 of its potential returns per unit of risk. The Procter Gamble is currently generating about -0.06 per unit of risk. If you would invest 2,022 in Telefonaktiebolaget LM Ericsson on February 4, 2025 and sell it today you would earn a total of 290.00 from holding Telefonaktiebolaget LM Ericsson or generate 14.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. The Procter Gamble
Performance |
| Timeline |
| Telefonaktiebolaget |
| Procter Gamble |
Telefonaktiebolaget and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Procter Gamble
The main advantage of trading using opposite Telefonaktiebolaget and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget 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.| Telefonaktiebolaget vs. Unifique Telecomunicaes SA | Telefonaktiebolaget vs. Air Products and | Telefonaktiebolaget vs. CRISPR Therapeutics AG | Telefonaktiebolaget vs. Charter Communications |
| Procter Gamble vs. Melco Resorts Entertainment | Procter Gamble vs. Fidelity National Information | Procter Gamble vs. Micron Technology | Procter Gamble vs. Live Nation Entertainment, |
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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