Correlation Between Procter Gamble and Bel Fuse
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Bel Fuse 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 Bel Fuse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Bel Fuse A, you can compare the effects of market volatilities on Procter Gamble and Bel Fuse 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 Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Bel Fuse.
Diversification Opportunities for Procter Gamble and Bel Fuse
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Bel is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A 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 Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse A has no effect on the direction of Procter Gamble i.e., Procter Gamble and Bel Fuse go up and down completely randomly.
Pair Corralation between Procter Gamble and Bel Fuse
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.55 times more return on investment than Bel Fuse. However, Procter Gamble is 1.83 times less risky than Bel Fuse. It trades about 0.1 of its potential returns per unit of risk. Bel Fuse A is currently generating about -0.04 per unit of risk. If you would invest 17,219 in Procter Gamble on August 30, 2024 and sell it today you would earn a total of 717.00 from holding Procter Gamble or generate 4.16% 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. Bel Fuse A
Performance |
| Timeline |
| Procter Gamble |
| Bel Fuse A |
Procter Gamble and Bel Fuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Bel Fuse
The main advantage of trading using opposite Procter Gamble and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark |
| Bel Fuse vs. Fabrinet | Bel Fuse vs. Knowles Cor | Bel Fuse vs. Ubiquiti Networks | Bel Fuse vs. AmpliTech Group |
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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