Correlation Between MSCI and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both MSCI 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 MSCI and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSCI Inc and The Procter Gamble, you can compare the effects of market volatilities on MSCI 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 MSCI with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI and Procter Gamble.
Diversification Opportunities for MSCI and Procter Gamble
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MSCI and Procter is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MSCI Inc and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and MSCI 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 MSCI Inc 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 MSCI i.e., MSCI and Procter Gamble go up and down completely randomly.
Pair Corralation between MSCI and Procter Gamble
Assuming the 90 days trading horizon MSCI Inc is expected to generate 1.62 times more return on investment than Procter Gamble. However, MSCI is 1.62 times more volatile than The Procter Gamble. It trades about 0.05 of its potential returns per unit of risk. The Procter Gamble is currently generating about 0.05 per unit of risk. If you would invest 5,843 in MSCI Inc on September 2, 2024 and sell it today you would earn a total of 2,288 from holding MSCI Inc or generate 39.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.44% |
| Values | Daily Returns |
MSCI Inc vs. The Procter Gamble
Performance |
| Timeline |
| MSCI Inc |
| Procter Gamble |
MSCI and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSCI and Procter Gamble
The main advantage of trading using opposite MSCI and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSCI 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.| MSCI vs. Livetech da Bahia | MSCI vs. Raytheon Technologies | MSCI vs. Align Technology | MSCI vs. Monster Beverage |
| Procter Gamble vs. United Rentals | Procter Gamble vs. Tyson Foods | Procter Gamble vs. salesforce inc | Procter Gamble vs. Beyond Meat |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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