Correlation Between Procter Gamble and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and WW Grainger 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 WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and WW Grainger, you can compare the effects of market volatilities on Procter Gamble and WW Grainger 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 WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and WW Grainger.
Diversification Opportunities for Procter Gamble and WW Grainger
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and GWW is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of Procter Gamble i.e., Procter Gamble and WW Grainger go up and down completely randomly.
Pair Corralation between Procter Gamble and WW Grainger
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 2.42 times less return on investment than WW Grainger. But when comparing it to its historical volatility, Procter Gamble is 1.45 times less risky than WW Grainger. It trades about 0.17 of its potential returns per unit of risk. WW Grainger is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 110,223 in WW Grainger on August 27, 2024 and sell it today you would earn a total of 11,353 from holding WW Grainger or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. WW Grainger
Performance |
| Timeline |
| Procter Gamble |
| WW Grainger |
Procter Gamble and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and WW Grainger
The main advantage of trading using opposite Procter Gamble and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger'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 |
| WW Grainger vs. Watsco Inc | WW Grainger vs. Pool Corporation | WW Grainger vs. MSC Industrial Direct | WW Grainger vs. Applied Industrial Technologies |
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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