Correlation Between Procter Gamble and ATP
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and ATP 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 ATP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and ATP, you can compare the effects of market volatilities on Procter Gamble and ATP 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 ATP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and ATP.
Diversification Opportunities for Procter Gamble and ATP
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Procter and ATP is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and ATP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATP 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 ATP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATP has no effect on the direction of Procter Gamble i.e., Procter Gamble and ATP go up and down completely randomly.
Pair Corralation between Procter Gamble and ATP
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 10.38 times less return on investment than ATP. But when comparing it to its historical volatility, Procter Gamble is 6.59 times less risky than ATP. It trades about 0.08 of its potential returns per unit of risk. ATP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.00 in ATP on August 24, 2024 and sell it today you would earn a total of 0.00 from holding ATP or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. ATP
Performance |
| Timeline |
| Procter Gamble |
| ATP |
Procter Gamble and ATP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and ATP
The main advantage of trading using opposite Procter Gamble and ATP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, ATP 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 ATP will offset losses from the drop in ATP's long position.| Procter Gamble vs. Honest Company | Procter Gamble vs. Hims Hers Health | Procter Gamble vs. Kimberly Clark | Procter Gamble vs. Colgate Palmolive |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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