Correlation Between Procter Gamble and American Aires
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and American Aires 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 American Aires into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and American Aires, you can compare the effects of market volatilities on Procter Gamble and American Aires 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 American Aires. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and American Aires.
Diversification Opportunities for Procter Gamble and American Aires
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Procter and American is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and American Aires in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Aires 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 are associated (or correlated) with American Aires. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Aires has no effect on the direction of Procter Gamble i.e., Procter Gamble and American Aires go up and down completely randomly.
Pair Corralation between Procter Gamble and American Aires
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 13.37 times less return on investment than American Aires. But when comparing it to its historical volatility, Procter Gamble is 17.61 times less risky than American Aires. It trades about 0.07 of its potential returns per unit of risk. American Aires is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 31.00 in American Aires on August 27, 2024 and sell it today you would lose (18.00) from holding American Aires or give up 58.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Procter Gamble vs. American Aires
Performance |
| Timeline |
| Procter Gamble |
| American Aires |
Procter Gamble and American Aires Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and American Aires
The main advantage of trading using opposite Procter Gamble and American Aires positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, American Aires 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 American Aires will offset losses from the drop in American Aires' long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| American Aires vs. alpha En | American Aires vs. Alps Electric Co | American Aires vs. Bitmine Immersion Technologies | American Aires vs. AT S Austria |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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