Correlation Between Procter Gamble and Applied Industrial
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Applied Industrial 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 Applied Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Applied Industrial Technologies, you can compare the effects of market volatilities on Procter Gamble and Applied Industrial 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 Applied Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Applied Industrial.
Diversification Opportunities for Procter Gamble and Applied Industrial
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Procter and Applied is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Applied Industrial Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Industrial 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 Applied Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Industrial has no effect on the direction of Procter Gamble i.e., Procter Gamble and Applied Industrial go up and down completely randomly.
Pair Corralation between Procter Gamble and Applied Industrial
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.69 times less return on investment than Applied Industrial. In addition to that, Procter Gamble is 1.02 times more volatile than Applied Industrial Technologies. It trades about 0.06 of its total potential returns per unit of risk. Applied Industrial Technologies is currently generating about 0.1 per unit of volatility. If you would invest 25,739 in Applied Industrial Technologies on November 18, 2024 and sell it today you would earn a total of 795.00 from holding Applied Industrial Technologies or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Applied Industrial Technologie
Performance |
| Timeline |
| Procter Gamble |
| Applied Industrial |
Procter Gamble and Applied Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Applied Industrial
The main advantage of trading using opposite Procter Gamble and Applied Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Applied Industrial 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 Applied Industrial will offset losses from the drop in Applied Industrial's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
| Applied Industrial vs. Core Main | Applied Industrial vs. WW Grainger | Applied Industrial vs. DXP Enterprises | Applied Industrial vs. SiteOne Landscape Supply |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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