Correlation Between Procter Gamble and Auburn Bancorp
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Auburn Bancorp 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 Auburn Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Auburn Bancorp, you can compare the effects of market volatilities on Procter Gamble and Auburn Bancorp 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 Auburn Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Auburn Bancorp.
Diversification Opportunities for Procter Gamble and Auburn Bancorp
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Auburn is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Auburn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn Bancorp 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 Auburn Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn Bancorp has no effect on the direction of Procter Gamble i.e., Procter Gamble and Auburn Bancorp go up and down completely randomly.
Pair Corralation between Procter Gamble and Auburn Bancorp
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.57 times more return on investment than Auburn Bancorp. However, Procter Gamble is 1.75 times less risky than Auburn Bancorp. It trades about 0.06 of its potential returns per unit of risk. Auburn Bancorp is currently generating about -0.03 per unit of risk. If you would invest 13,599 in Procter Gamble on December 5, 2024 and sell it today you would earn a total of 3,719 from holding Procter Gamble or generate 27.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Auburn Bancorp
Performance |
| Timeline |
| Procter Gamble |
| Auburn Bancorp |
Procter Gamble and Auburn Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Auburn Bancorp
The main advantage of trading using opposite Procter Gamble and Auburn Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Auburn Bancorp 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 Auburn Bancorp will offset losses from the drop in Auburn Bancorp's long position.| Procter Gamble vs. The Clorox | ||
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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