Correlation Between Procter Gamble and Energizer Holdings
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Energizer Holdings 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 Energizer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Energizer Holdings, you can compare the effects of market volatilities on Procter Gamble and Energizer Holdings 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 Energizer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Energizer Holdings.
Diversification Opportunities for Procter Gamble and Energizer Holdings
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Procter and Energizer is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Energizer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energizer Holdings 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 Energizer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energizer Holdings has no effect on the direction of Procter Gamble i.e., Procter Gamble and Energizer Holdings go up and down completely randomly.
Pair Corralation between Procter Gamble and Energizer Holdings
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.0 times more return on investment than Energizer Holdings. However, Procter Gamble is 1.0 times more volatile than Energizer Holdings. It trades about 0.03 of its potential returns per unit of risk. Energizer Holdings is currently generating about -0.06 per unit of risk. If you would invest 16,497 in Procter Gamble on November 3, 2024 and sell it today you would earn a total of 102.00 from holding Procter Gamble or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Energizer Holdings
Performance |
| Timeline |
| Procter Gamble |
| Energizer Holdings |
Procter Gamble and Energizer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Energizer Holdings
The main advantage of trading using opposite Procter Gamble and Energizer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Energizer Holdings 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 Energizer Holdings will offset losses from the drop in Energizer Holdings' long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
| Energizer Holdings vs. Acuity Brands | Energizer Holdings vs. Espey Mfg Electronics | Energizer Holdings vs. Preformed Line Products | Energizer Holdings vs. Kimball Electronics |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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