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 B, 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
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Bel is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Bel Fuse B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse B 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 B 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 4.38 times less return on investment than Bel Fuse. But when comparing it to its historical volatility, Procter Gamble is 3.47 times less risky than Bel Fuse. It trades about 0.05 of its potential returns per unit of risk. Bel Fuse B is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,506 in Bel Fuse B on August 24, 2024 and sell it today you would earn a total of 4,209 from holding Bel Fuse B or generate 120.05% 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 B
Performance |
| Timeline |
| Procter Gamble |
| Bel Fuse B |
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. Eshallgo Class A | Procter Gamble vs. Amtech Systems | Procter Gamble vs. Gold Fields Ltd | Procter Gamble vs. Aegean Airlines SA |
| Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Methode Electronics | Bel Fuse vs. Richardson Electronics | Bel Fuse vs. Plexus Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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