Correlation Between Procter Gamble and Catalyst Metals
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Catalyst Metals 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 Catalyst Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Catalyst Metals Limited, you can compare the effects of market volatilities on Procter Gamble and Catalyst Metals 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 Catalyst Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Catalyst Metals.
Diversification Opportunities for Procter Gamble and Catalyst Metals
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Catalyst is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Catalyst Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals 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 Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Procter Gamble i.e., Procter Gamble and Catalyst Metals go up and down completely randomly.
Pair Corralation between Procter Gamble and Catalyst Metals
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 16.19 times less return on investment than Catalyst Metals. But when comparing it to its historical volatility, Procter Gamble is 10.1 times less risky than Catalyst Metals. It trades about 0.05 of its potential returns per unit of risk. Catalyst Metals Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Catalyst Metals Limited on August 30, 2024 and sell it today you would earn a total of 126.00 from holding Catalyst Metals Limited or generate 233.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.73% |
| Values | Daily Returns |
Procter Gamble vs. Catalyst Metals Limited
Performance |
| Timeline |
| Procter Gamble |
| Catalyst Metals |
Procter Gamble and Catalyst Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Catalyst Metals
The main advantage of trading using opposite Procter Gamble and Catalyst Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Catalyst Metals 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 Catalyst Metals will offset losses from the drop in Catalyst Metals' long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark |
| Catalyst Metals vs. Legacy Education | Catalyst Metals vs. Apple Inc | Catalyst Metals vs. NVIDIA | Catalyst Metals vs. Microsoft |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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