Correlation Between Global E and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Global E 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 Global E and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Online and Procter Gamble, you can compare the effects of market volatilities on Global E 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 Global E with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Procter Gamble.
Diversification Opportunities for Global E and Procter Gamble
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Procter is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Global E 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 Global E Online 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 Global E i.e., Global E and Procter Gamble go up and down completely randomly.
Pair Corralation between Global E and Procter Gamble
Given the investment horizon of 90 days Global E Online is expected to generate 3.44 times more return on investment than Procter Gamble. However, Global E is 3.44 times more volatile than Procter Gamble. It trades about 0.06 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.05 per unit of risk. If you would invest 3,136 in Global E Online on August 29, 2024 and sell it today you would earn a total of 2,030 from holding Global E Online or generate 64.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Online vs. Procter Gamble
Performance |
| Timeline |
| Global E Online |
| Procter Gamble |
Global E and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global E and Procter Gamble
The main advantage of trading using opposite Global E and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E 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.The idea behind Global E Online and Procter Gamble pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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