Correlation Between Procter Gamble and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Wells Fargo 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 Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Wells Fargo Omega, you can compare the effects of market volatilities on Procter Gamble and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Wells Fargo.
Diversification Opportunities for Procter Gamble and Wells Fargo
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Procter and Wells is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Wells Fargo Omega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Omega 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Omega has no effect on the direction of Procter Gamble i.e., Procter Gamble and Wells Fargo go up and down completely randomly.
Pair Corralation between Procter Gamble and Wells Fargo
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.0 times more return on investment than Wells Fargo. However, Procter Gamble is 1.0 times less risky than Wells Fargo. It trades about 0.09 of its potential returns per unit of risk. Wells Fargo Omega is currently generating about 0.07 per unit of risk. If you would invest 14,228 in Procter Gamble on September 4, 2024 and sell it today you would earn a total of 3,314 from holding Procter Gamble or generate 23.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 65.59% |
| Values | Daily Returns |
Procter Gamble vs. Wells Fargo Omega
Performance |
| Timeline |
| Procter Gamble |
| Wells Fargo Omega |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Procter Gamble and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Wells Fargo
The main advantage of trading using opposite Procter Gamble and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies |
| Wells Fargo vs. Iaadx | Wells Fargo vs. Balanced Fund Investor | Wells Fargo vs. Leggmason Partners Institutional | Wells Fargo vs. Ab Value Fund |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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