Correlation Between Procter Gamble and Virgin Group
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Virgin Group 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 Virgin Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Virgin Group Acquisition, you can compare the effects of market volatilities on Procter Gamble and Virgin Group 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 Virgin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Virgin Group.
Diversification Opportunities for Procter Gamble and Virgin Group
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Procter and Virgin is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Virgin Group Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Group Acquisition 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 Virgin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Group Acquisition has no effect on the direction of Procter Gamble i.e., Procter Gamble and Virgin Group go up and down completely randomly.
Pair Corralation between Procter Gamble and Virgin Group
Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the Virgin Group. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble is 4.02 times less risky than Virgin Group. The stock trades about -0.02 of its potential returns per unit of risk. The Virgin Group Acquisition is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 130.00 in Virgin Group Acquisition on November 2, 2024 and sell it today you would earn a total of 9.00 from holding Virgin Group Acquisition or generate 6.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Virgin Group Acquisition
Performance |
| Timeline |
| Procter Gamble |
| Virgin Group Acquisition |
Procter Gamble and Virgin Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Virgin Group
The main advantage of trading using opposite Procter Gamble and Virgin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Virgin Group 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 Virgin Group will offset losses from the drop in Virgin Group's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies |
| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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