Correlation Between Procter Gamble and Designer Brands
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Designer Brands 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 Designer Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Designer Brands, you can compare the effects of market volatilities on Procter Gamble and Designer Brands 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 Designer Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Designer Brands.
Diversification Opportunities for Procter Gamble and Designer Brands
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Procter and Designer is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands 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 Designer Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Designer Brands has no effect on the direction of Procter Gamble i.e., Procter Gamble and Designer Brands go up and down completely randomly.
Pair Corralation between Procter Gamble and Designer Brands
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.42 times more return on investment than Designer Brands. However, Procter Gamble is 2.36 times less risky than Designer Brands. It trades about 0.08 of its potential returns per unit of risk. Designer Brands is currently generating about -0.3 per unit of risk. If you would invest 16,958 in Procter Gamble on August 24, 2024 and sell it today you would earn a total of 317.00 from holding Procter Gamble or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Designer Brands
Performance |
| Timeline |
| Procter Gamble |
| Designer Brands |
Procter Gamble and Designer Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Designer Brands
The main advantage of trading using opposite Procter Gamble and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Designer Brands 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 Designer Brands will offset losses from the drop in Designer Brands' long position.| Procter Gamble vs. Honest Company | Procter Gamble vs. Hims Hers Health | Procter Gamble vs. Kimberly Clark | Procter Gamble vs. Colgate Palmolive |
| Designer Brands vs. Wolverine World Wide | Designer Brands vs. Weyco Group | Designer Brands vs. Steven Madden | Designer Brands vs. Rocky Brands |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |