Correlation Between Procter Gamble and InTest
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and InTest 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 InTest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and inTest, you can compare the effects of market volatilities on Procter Gamble and InTest 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 InTest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and InTest.
Diversification Opportunities for Procter Gamble and InTest
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Procter and InTest is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and inTest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on inTest 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 InTest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of inTest has no effect on the direction of Procter Gamble i.e., Procter Gamble and InTest go up and down completely randomly.
Pair Corralation between Procter Gamble and InTest
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.55 times less return on investment than InTest. But when comparing it to its historical volatility, Procter Gamble is 3.07 times less risky than InTest. It trades about 0.17 of its potential returns per unit of risk. inTest is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 738.00 in inTest on August 27, 2024 and sell it today you would earn a total of 39.00 from holding inTest or generate 5.28% 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. inTest
Performance |
| Timeline |
| Procter Gamble |
| inTest |
Procter Gamble and InTest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and InTest
The main advantage of trading using opposite Procter Gamble and InTest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, InTest 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 InTest will offset losses from the drop in InTest'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 |
| InTest vs. Axcelis Technologies | InTest vs. Lam Research Corp | InTest vs. Photronics | InTest vs. indie Semiconductor |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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