Correlation Between Procter Gamble and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Cal Maine 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 Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Cal Maine Foods, you can compare the effects of market volatilities on Procter Gamble and Cal Maine 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 Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Cal Maine.
Diversification Opportunities for Procter Gamble and Cal Maine
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Cal is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods 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 Cal Maine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of Procter Gamble i.e., Procter Gamble and Cal Maine go up and down completely randomly.
Pair Corralation between Procter Gamble and Cal Maine
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 4.83 times less return on investment than Cal Maine. But when comparing it to its historical volatility, Procter Gamble is 1.54 times less risky than Cal Maine. It trades about 0.08 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 5,879 in Cal Maine Foods on August 28, 2024 and sell it today you would earn a total of 3,770 from holding Cal Maine Foods or generate 64.13% 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. Cal Maine Foods
Performance |
| Timeline |
| Procter Gamble |
| Cal Maine Foods |
Procter Gamble and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Cal Maine
The main advantage of trading using opposite Procter Gamble and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Cal Maine 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 Cal Maine will offset losses from the drop in Cal Maine's long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| Cal Maine vs. Bunge Limited | Cal Maine vs. Tyson Foods | Cal Maine vs. Dole PLC | Cal Maine vs. Adecoagro SA |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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