Correlation Between GMO Internet and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both GMO Internet 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 GMO Internet and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Procter Gamble, you can compare the effects of market volatilities on GMO Internet 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 GMO Internet with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Procter Gamble.
Diversification Opportunities for GMO Internet and Procter Gamble
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GMO and Procter is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and GMO Internet 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 GMO Internet 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 GMO Internet i.e., GMO Internet and Procter Gamble go up and down completely randomly.
Pair Corralation between GMO Internet and Procter Gamble
Assuming the 90 days horizon GMO Internet is expected to generate 2.08 times more return on investment than Procter Gamble. However, GMO Internet is 2.08 times more volatile than Procter Gamble. It trades about 0.32 of its potential returns per unit of risk. Procter Gamble is currently generating about -0.13 per unit of risk. If you would invest 1,898 in GMO Internet on December 25, 2024 and sell it today you would earn a total of 287.00 from holding GMO Internet or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. Procter Gamble
Performance |
| Timeline |
| GMO Internet |
| Procter Gamble |
GMO Internet and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Procter Gamble
The main advantage of trading using opposite GMO Internet and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet 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.| GMO Internet vs. Cable One | GMO Internet vs. Charter Communications | GMO Internet vs. Frontier Communications Parent | GMO Internet vs. Liberty Broadband Srs |
| Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight | Procter Gamble vs. Kimberly Clark |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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