Correlation Between Procter Gamble and International Paper
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and International Paper 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 International Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and International Paper, you can compare the effects of market volatilities on Procter Gamble and International Paper 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 International Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and International Paper.
Diversification Opportunities for Procter Gamble and International Paper
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Procter and International is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and International Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Paper 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 International Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Paper has no effect on the direction of Procter Gamble i.e., Procter Gamble and International Paper go up and down completely randomly.
Pair Corralation between Procter Gamble and International Paper
If you would invest 12,998 in Procter Gamble on December 24, 2024 and sell it today you would earn a total of 3,671 from holding Procter Gamble or generate 28.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Procter Gamble vs. International Paper
Performance |
| Timeline |
| Procter Gamble |
| International Paper |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Procter Gamble and International Paper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and International Paper
The main advantage of trading using opposite Procter Gamble and International Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, International Paper 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 International Paper will offset losses from the drop in International Paper's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
| International Paper vs. Broadstone Net Lease | International Paper vs. Webus International Limited | International Paper vs. Canaf Investments | International Paper vs. NorthWestern |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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