Correlation Between Procter Gamble and Kenvue
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Kenvue 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 Kenvue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Kenvue Inc, you can compare the effects of market volatilities on Procter Gamble and Kenvue 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 Kenvue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Kenvue.
Diversification Opportunities for Procter Gamble and Kenvue
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Procter and Kenvue is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of Procter Gamble i.e., Procter Gamble and Kenvue go up and down completely randomly.
Pair Corralation between Procter Gamble and Kenvue
Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the Kenvue. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble is 1.19 times less risky than Kenvue. The stock trades about -0.02 of its potential returns per unit of risk. The Kenvue Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,191 in Kenvue Inc on November 2, 2024 and sell it today you would lose (19.00) from holding Kenvue Inc or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Kenvue Inc
Performance |
| Timeline |
| Procter Gamble |
| Kenvue Inc |
Procter Gamble and Kenvue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Kenvue
The main advantage of trading using opposite Procter Gamble and Kenvue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Kenvue 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 Kenvue will offset losses from the drop in Kenvue's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies |
| Kenvue vs. Sun Country Airlines | Kenvue vs. Ryanair Holdings PLC | Kenvue vs. Lion One Metals | Kenvue vs. Lindblad Expeditions Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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