Correlation Between Procter Gamble and Givaudan
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Givaudan 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 Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Givaudan SA ADR, you can compare the effects of market volatilities on Procter Gamble and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Givaudan.
Diversification Opportunities for Procter Gamble and Givaudan
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Procter and Givaudan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Givaudan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA ADR 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA ADR has no effect on the direction of Procter Gamble i.e., Procter Gamble and Givaudan go up and down completely randomly.
Pair Corralation between Procter Gamble and Givaudan
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.87 times more return on investment than Givaudan. However, Procter Gamble is 1.15 times less risky than Givaudan. It trades about 0.19 of its potential returns per unit of risk. Givaudan SA ADR is currently generating about -0.33 per unit of risk. If you would invest 16,930 in Procter Gamble on August 28, 2024 and sell it today you would earn a total of 809.00 from holding Procter Gamble or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Givaudan SA ADR
Performance |
| Timeline |
| Procter Gamble |
| Givaudan SA ADR |
Procter Gamble and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Givaudan
The main advantage of trading using opposite Procter Gamble and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |