Correlation Between Procter Gamble and Amazon
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Amazon 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 Procter Gamble and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble DRC and Amazon Inc, you can compare the effects of market volatilities on Procter Gamble and Amazon 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 Procter Gamble with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Amazon.
Diversification Opportunities for Procter Gamble and Amazon
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Amazon is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble DRC and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Procter Gamble 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 Procter Gamble DRC are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Procter Gamble i.e., Procter Gamble and Amazon go up and down completely randomly.
Pair Corralation between Procter Gamble and Amazon
Assuming the 90 days horizon Procter Gamble DRC is expected to under-perform the Amazon. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble DRC is 1.09 times less risky than Amazon. The stock trades about -0.07 of its potential returns per unit of risk. The Amazon Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 179,500 in Amazon Inc on October 20, 2024 and sell it today you would earn a total of 8,000 from holding Amazon Inc or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble DRC vs. Amazon Inc
Performance |
| Timeline |
| Procter Gamble DRC |
| Amazon Inc |
Procter Gamble and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Amazon
The main advantage of trading using opposite Procter Gamble and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Procter Gamble vs. Transportadora de Gas | Procter Gamble vs. Compania de Transporte | Procter Gamble vs. Harmony Gold Mining | Procter Gamble vs. Agrometal SAI |
| Amazon vs. Compania de Transporte | Amazon vs. Telecom Argentina | Amazon vs. Harmony Gold Mining | Amazon vs. Transportadora de Gas |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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