Correlation Between General Insurance and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both General Insurance 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 General Insurance and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Insurance and Procter Gamble Health, you can compare the effects of market volatilities on General Insurance 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 General Insurance with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Insurance and Procter Gamble.
Diversification Opportunities for General Insurance and Procter Gamble
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between General and Procter is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance and Procter Gamble Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble Health and General Insurance 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 General Insurance 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 Health has no effect on the direction of General Insurance i.e., General Insurance and Procter Gamble go up and down completely randomly.
Pair Corralation between General Insurance and Procter Gamble
Assuming the 90 days trading horizon General Insurance is expected to generate 2.87 times more return on investment than Procter Gamble. However, General Insurance is 2.87 times more volatile than Procter Gamble Health. It trades about 0.13 of its potential returns per unit of risk. Procter Gamble Health is currently generating about -0.34 per unit of risk. If you would invest 42,535 in General Insurance on October 12, 2024 and sell it today you would earn a total of 3,955 from holding General Insurance or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Insurance vs. Procter Gamble Health
Performance |
| Timeline |
| General Insurance |
| Procter Gamble Health |
General Insurance and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Insurance and Procter Gamble
The main advantage of trading using opposite General Insurance and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Insurance 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.| General Insurance vs. Consolidated Construction Consortium | General Insurance vs. Action Construction Equipment | General Insurance vs. Transport of | General Insurance vs. Total Transport Systems |
| Procter Gamble vs. General Insurance | Procter Gamble vs. Associated Alcohols Breweries | Procter Gamble vs. United Breweries Limited | Procter Gamble vs. Union Bank of |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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