Correlation Between Procter Gamble and GameStop Corp
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and GameStop Corp 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 GameStop Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and GameStop Corp, you can compare the effects of market volatilities on Procter Gamble and GameStop Corp 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 GameStop Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and GameStop Corp.
Diversification Opportunities for Procter Gamble and GameStop Corp
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and GameStop is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp 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 GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of Procter Gamble i.e., Procter Gamble and GameStop Corp go up and down completely randomly.
Pair Corralation between Procter Gamble and GameStop Corp
Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the GameStop Corp. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble is 3.57 times less risky than GameStop Corp. The stock trades about -0.02 of its potential returns per unit of risk. The GameStop Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,273 in GameStop Corp on October 26, 2024 and sell it today you would earn a total of 560.00 from holding GameStop Corp or generate 24.64% 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. GameStop Corp
Performance |
| Timeline |
| Procter Gamble |
| GameStop Corp |
Procter Gamble and GameStop Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and GameStop Corp
The main advantage of trading using opposite Procter Gamble and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, GameStop Corp 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 GameStop Corp will offset losses from the drop in GameStop Corp's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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