Correlation Between Procter Gamble and MicroSectors Solactive
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and MicroSectors Solactive 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 MicroSectors Solactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and MicroSectors Solactive FANG, you can compare the effects of market volatilities on Procter Gamble and MicroSectors Solactive 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 MicroSectors Solactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and MicroSectors Solactive.
Diversification Opportunities for Procter Gamble and MicroSectors Solactive
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and MicroSectors is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and MicroSectors Solactive FANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors Solactive 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 MicroSectors Solactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Solactive has no effect on the direction of Procter Gamble i.e., Procter Gamble and MicroSectors Solactive go up and down completely randomly.
Pair Corralation between Procter Gamble and MicroSectors Solactive
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.25 times more return on investment than MicroSectors Solactive. However, Procter Gamble is 4.07 times less risky than MicroSectors Solactive. It trades about 0.29 of its potential returns per unit of risk. MicroSectors Solactive FANG is currently generating about 0.02 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. MicroSectors Solactive FANG
Performance |
| Timeline |
| Procter Gamble |
| MicroSectors Solactive |
Procter Gamble and MicroSectors Solactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and MicroSectors Solactive
The main advantage of trading using opposite Procter Gamble and MicroSectors Solactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, MicroSectors Solactive 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 MicroSectors Solactive will offset losses from the drop in MicroSectors Solactive's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
| MicroSectors Solactive vs. MicroSectors FANG Index | MicroSectors Solactive vs. Direxion Daily Dow | MicroSectors Solactive vs. Direxion Daily Semiconductor |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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