Correlation Between Procter Gamble and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Consumer Staples 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 Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Consumer Staples Portfolio, you can compare the effects of market volatilities on Procter Gamble and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Consumer Staples.
Diversification Opportunities for Procter Gamble and Consumer Staples
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Procter and Consumer is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Procter Gamble i.e., Procter Gamble and Consumer Staples go up and down completely randomly.
Pair Corralation between Procter Gamble and Consumer Staples
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.32 times more return on investment than Consumer Staples. However, Procter Gamble is 1.32 times more volatile than Consumer Staples Portfolio. It trades about 0.05 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.02 per unit of risk. If you would invest 14,468 in Procter Gamble on August 31, 2024 and sell it today you would earn a total of 3,458 from holding Procter Gamble or generate 23.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Procter Gamble vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Procter Gamble |
| Consumer Staples Por |
Procter Gamble and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Consumer Staples
The main advantage of trading using opposite Procter Gamble and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| Procter Gamble vs. Aquagold International | Procter Gamble vs. Morningstar Unconstrained Allocation | Procter Gamble vs. Thrivent High Yield | Procter Gamble vs. Via Renewables |
| Consumer Staples vs. Fidelity Advisor Health | Consumer Staples vs. Fidelity Advisor New | Consumer Staples vs. Fidelity Advisor Technology | Consumer Staples vs. Consumer Staples Portfolio |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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