Correlation Between Procter Gamble and Astor Star
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Astor Star 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 Astor Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Astor Star Fund, you can compare the effects of market volatilities on Procter Gamble and Astor Star 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 Astor Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Astor Star.
Diversification Opportunities for Procter Gamble and Astor Star
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and Astor is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Astor Star Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Star Fund 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 Astor Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Star Fund has no effect on the direction of Procter Gamble i.e., Procter Gamble and Astor Star go up and down completely randomly.
Pair Corralation between Procter Gamble and Astor Star
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.71 times more return on investment than Astor Star. However, Procter Gamble is 1.71 times more volatile than Astor Star Fund. It trades about 0.28 of its potential returns per unit of risk. Astor Star Fund is currently generating about 0.35 per unit of risk. If you would invest 16,717 in Procter Gamble on August 30, 2024 and sell it today you would earn a total of 1,219 from holding Procter Gamble or generate 7.29% 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. Astor Star Fund
Performance |
| Timeline |
| Procter Gamble |
| Astor Star Fund |
Procter Gamble and Astor Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Astor Star
The main advantage of trading using opposite Procter Gamble and Astor Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Astor Star 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 Astor Star will offset losses from the drop in Astor Star's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark |
| Astor Star vs. Astor Star Fund | Astor Star vs. Astor Longshort Fund | Astor Star vs. Astor Longshort Fund | Astor Star vs. Astor Star Fund |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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