Correlation Between Procter Gamble and European Wax
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and European Wax 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 European Wax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and European Wax Center, you can compare the effects of market volatilities on Procter Gamble and European Wax 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 European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and European Wax.
Diversification Opportunities for Procter Gamble and European Wax
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and European is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center 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 European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Procter Gamble i.e., Procter Gamble and European Wax go up and down completely randomly.
Pair Corralation between Procter Gamble and European Wax
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.23 times more return on investment than European Wax. However, Procter Gamble is 4.31 times less risky than European Wax. It trades about 0.06 of its potential returns per unit of risk. European Wax Center is currently generating about -0.09 per unit of risk. If you would invest 16,119 in Procter Gamble on August 24, 2024 and sell it today you would earn a total of 1,156 from holding Procter Gamble or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. European Wax Center
Performance |
| Timeline |
| Procter Gamble |
| European Wax Center |
Procter Gamble and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and European Wax
The main advantage of trading using opposite Procter Gamble and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, European Wax 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 European Wax will offset losses from the drop in European Wax's long position.| Procter Gamble vs. Honest Company | Procter Gamble vs. Hims Hers Health | Procter Gamble vs. Kimberly Clark | Procter Gamble vs. Colgate Palmolive |
| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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