Correlation Between Procter Gamble and United States
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on Procter Gamble and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and United States.
Diversification Opportunities for Procter Gamble and United States
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Procter and United is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble DRC and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Procter Gamble i.e., Procter Gamble and United States go up and down completely randomly.
Pair Corralation between Procter Gamble and United States
Assuming the 90 days horizon Procter Gamble DRC is expected to generate 0.41 times more return on investment than United States. However, Procter Gamble DRC is 2.46 times less risky than United States. It trades about 0.24 of its potential returns per unit of risk. United States Steel is currently generating about 0.02 per unit of risk. If you would invest 332,100 in Procter Gamble DRC on September 4, 2024 and sell it today you would earn a total of 26,900 from holding Procter Gamble DRC or generate 8.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble DRC vs. United States Steel
Performance |
| Timeline |
| Procter Gamble DRC |
| United States Steel |
Procter Gamble and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and United States
The main advantage of trading using opposite Procter Gamble and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Procter Gamble vs. United States Steel | Procter Gamble vs. Verizon Communications | Procter Gamble vs. CVS Health | Procter Gamble vs. McEwen Mining |
| United States vs. Prudential Financial | United States vs. McEwen Mining | United States vs. KB Home | United States vs. Genworth Financial |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |