Correlation Between European Wax and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both European Wax 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 European Wax and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and Procter Gamble, you can compare the effects of market volatilities on European Wax 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 European Wax with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Procter Gamble.
Diversification Opportunities for European Wax and Procter Gamble
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Procter is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and European Wax 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 European Wax Center 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 European Wax i.e., European Wax and Procter Gamble go up and down completely randomly.
Pair Corralation between European Wax and Procter Gamble
Given the investment horizon of 90 days European Wax Center is expected to under-perform the Procter Gamble. In addition to that, European Wax is 5.72 times more volatile than Procter Gamble. It trades about -0.08 of its total potential returns per unit of risk. Procter Gamble is currently generating about 0.08 per unit of volatility. If you would invest 16,958 in Procter Gamble on August 24, 2024 and sell it today you would earn a total of 317.00 from holding Procter Gamble or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. Procter Gamble
Performance |
| Timeline |
| European Wax Center |
| Procter Gamble |
European Wax and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and Procter Gamble
The main advantage of trading using opposite European Wax and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax 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.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
| Procter Gamble vs. Honest Company | Procter Gamble vs. Hims Hers Health | Procter Gamble vs. Kimberly Clark | Procter Gamble vs. Colgate Palmolive |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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