Correlation Between Procter Gamble and Franchise
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Franchise 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 Franchise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Franchise Group, you can compare the effects of market volatilities on Procter Gamble and Franchise 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 Franchise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Franchise.
Diversification Opportunities for Procter Gamble and Franchise
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Procter and Franchise is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Franchise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franchise Group 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 Franchise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franchise Group has no effect on the direction of Procter Gamble i.e., Procter Gamble and Franchise go up and down completely randomly.
Pair Corralation between Procter Gamble and Franchise
If you would invest 16,607 in Procter Gamble on November 3, 2024 and sell it today you would lose (8.00) from holding Procter Gamble or give up 0.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.8% |
| Values | Daily Returns |
Procter Gamble vs. Franchise Group
Performance |
| Timeline |
| Procter Gamble |
| Franchise Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Procter Gamble and Franchise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Franchise
The main advantage of trading using opposite Procter Gamble and Franchise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Franchise 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 Franchise will offset losses from the drop in Franchise's long position.| Procter Gamble vs. ProShares Russell Dividend | Procter Gamble vs. United Rentals | Procter Gamble vs. Kforce Inc | Procter Gamble vs. The Ensign Group |
| Franchise vs. Mega Uranium | Franchise vs. Laramide Resources | Franchise vs. NXG NextGen Infrastructure | Franchise vs. Pinetree Capital |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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