Correlation Between Procter Gamble and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Inter Parfums 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 Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Inter Parfums, you can compare the effects of market volatilities on Procter Gamble and Inter Parfums 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 Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Inter Parfums.
Diversification Opportunities for Procter Gamble and Inter Parfums
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Inter is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums 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 Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of Procter Gamble i.e., Procter Gamble and Inter Parfums go up and down completely randomly.
Pair Corralation between Procter Gamble and Inter Parfums
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate about the same return on investment as Inter Parfums. But, Procter Gamble is 2.32 times less risky than Inter Parfums. It trades about 0.07 of its potential returns per unit of risk. Inter Parfums is currently generating about 0.03 per unit of risk. If you would invest 11,233 in Inter Parfums on August 27, 2024 and sell it today you would earn a total of 2,174 from holding Inter Parfums or generate 19.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Inter Parfums
Performance |
| Timeline |
| Procter Gamble |
| Inter Parfums |
Procter Gamble and Inter Parfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Inter Parfums
The main advantage of trading using opposite Procter Gamble and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| Inter Parfums vs. J J Snack | Inter Parfums vs. John B Sanfilippo | Inter Parfums vs. Innospec | Inter Parfums vs. Independent Bank |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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