Correlation Between Procter Gamble and American Hotel
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and American Hotel 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 Hotel 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 Hotel Income, you can compare the effects of market volatilities on Procter Gamble and American Hotel 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 Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and American Hotel.
Diversification Opportunities for Procter Gamble and American Hotel
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and American is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income 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 Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Procter Gamble i.e., Procter Gamble and American Hotel go up and down completely randomly.
Pair Corralation between Procter Gamble and American Hotel
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.18 times more return on investment than American Hotel. However, Procter Gamble is 5.48 times less risky than American Hotel. It trades about 0.06 of its potential returns per unit of risk. American Hotel Income is currently generating about -0.05 per unit of risk. If you would invest 14,255 in Procter Gamble on September 3, 2024 and sell it today you would earn a total of 3,671 from holding Procter Gamble or generate 25.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.05% |
| Values | Daily Returns |
Procter Gamble vs. American Hotel Income
Performance |
| Timeline |
| Procter Gamble |
| American Hotel Income |
Procter Gamble and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and American Hotel
The main advantage of trading using opposite Procter Gamble and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, American Hotel 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 Hotel will offset losses from the drop in American Hotel's long position.| Procter Gamble vs. Highway Holdings Limited | Procter Gamble vs. QCR Holdings | Procter Gamble vs. Partner Communications | Procter Gamble vs. Acumen Pharmaceuticals |
| American Hotel vs. Ashford Hospitality Trust | American Hotel vs. Ashford Hospitality Trust | American Hotel vs. Ashford Hospitality Trust | American Hotel vs. Ashford Hospitality Trust |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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