Correlation Between Procter Gamble and Chemours
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Chemours 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 Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Chemours Co, you can compare the effects of market volatilities on Procter Gamble and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Chemours.
Diversification Opportunities for Procter Gamble and Chemours
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Procter and Chemours is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Procter Gamble i.e., Procter Gamble and Chemours go up and down completely randomly.
Pair Corralation between Procter Gamble and Chemours
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.53 times more return on investment than Chemours. However, Procter Gamble is 1.9 times less risky than Chemours. It trades about 0.04 of its potential returns per unit of risk. Chemours Co is currently generating about -0.29 per unit of risk. If you would invest 16,966 in Procter Gamble on November 28, 2024 and sell it today you would earn a total of 164.00 from holding Procter Gamble or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Chemours Co
Performance |
| Timeline |
| Procter Gamble |
| Chemours |
Procter Gamble and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Chemours
The main advantage of trading using opposite Procter Gamble and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
| Chemours vs. International Flavors Fragrances | Chemours vs. Air Products and | Chemours vs. PPG Industries | Chemours vs. Linde plc Ordinary |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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