Correlation Between Procter Gamble and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Babcock Wilcox 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 Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Procter Gamble and Babcock Wilcox 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 Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Babcock Wilcox.
Diversification Opportunities for Procter Gamble and Babcock Wilcox
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Procter and Babcock is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Babcock Wilcox Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock Wilcox Enter 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 Babcock Wilcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock Wilcox Enter has no effect on the direction of Procter Gamble i.e., Procter Gamble and Babcock Wilcox go up and down completely randomly.
Pair Corralation between Procter Gamble and Babcock Wilcox
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.72 times more return on investment than Babcock Wilcox. However, Procter Gamble is 1.39 times less risky than Babcock Wilcox. It trades about 0.05 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.02 per unit of risk. If you would invest 16,413 in Procter Gamble on November 4, 2024 and sell it today you would earn a total of 186.00 from holding Procter Gamble or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| Procter Gamble |
| Babcock Wilcox Enter |
Procter Gamble and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Babcock Wilcox
The main advantage of trading using opposite Procter Gamble and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Babcock Wilcox 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 Babcock Wilcox will offset losses from the drop in Babcock Wilcox's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
| Babcock Wilcox vs. Scholastic | Babcock Wilcox vs. Chester Mining | Babcock Wilcox vs. Perseus Mining Limited | Babcock Wilcox vs. Universal Technical Institute |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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