Correlation Between T REX and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both T REX 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 T REX and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T REX 2X Long and Procter Gamble, you can compare the effects of market volatilities on T REX 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 T REX with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of T REX and Procter Gamble.
Diversification Opportunities for T REX and Procter Gamble
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MSTU and Procter is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding T REX 2X Long and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and T REX 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 T REX 2X Long 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 T REX i.e., T REX and Procter Gamble go up and down completely randomly.
Pair Corralation between T REX and Procter Gamble
Given the investment horizon of 90 days T REX 2X Long is expected to generate 16.3 times more return on investment than Procter Gamble. However, T REX is 16.3 times more volatile than Procter Gamble. It trades about 0.34 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.37 per unit of risk. If you would invest 6,350 in T REX 2X Long on September 3, 2024 and sell it today you would earn a total of 9,511 from holding T REX 2X Long or generate 149.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
T REX 2X Long vs. Procter Gamble
Performance |
| Timeline |
| T REX 2X |
| Procter Gamble |
T REX and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T REX and Procter Gamble
The main advantage of trading using opposite T REX and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T REX 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.| T REX vs. Tidal Trust II | T REX vs. Tidal Trust II | T REX vs. Direxion Daily META | T REX vs. Direxion Daily META |
| Procter Gamble vs. Highway Holdings Limited | Procter Gamble vs. QCR Holdings | Procter Gamble vs. Partner Communications | Procter Gamble vs. Acumen Pharmaceuticals |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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