Correlation Between Procter Gamble and MBT Bancshares
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and MBT Bancshares 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 MBT Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and MBT Bancshares, you can compare the effects of market volatilities on Procter Gamble and MBT Bancshares 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 MBT Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and MBT Bancshares.
Diversification Opportunities for Procter Gamble and MBT Bancshares
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and MBT is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and MBT Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBT Bancshares 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 MBT Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBT Bancshares has no effect on the direction of Procter Gamble i.e., Procter Gamble and MBT Bancshares go up and down completely randomly.
Pair Corralation between Procter Gamble and MBT Bancshares
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.95 times less return on investment than MBT Bancshares. But when comparing it to its historical volatility, Procter Gamble is 2.15 times less risky than MBT Bancshares. It trades about 0.08 of its potential returns per unit of risk. MBT Bancshares is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,637 in MBT Bancshares on August 26, 2024 and sell it today you would earn a total of 313.00 from holding MBT Bancshares or generate 19.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 53.33% |
| Values | Daily Returns |
Procter Gamble vs. MBT Bancshares
Performance |
| Timeline |
| Procter Gamble |
| MBT Bancshares |
Procter Gamble and MBT Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and MBT Bancshares
The main advantage of trading using opposite Procter Gamble and MBT Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, MBT Bancshares 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 MBT Bancshares will offset losses from the drop in MBT Bancshares' long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| MBT Bancshares vs. Invesco High Income | MBT Bancshares vs. Blackrock Muniholdings Ny | MBT Bancshares vs. MFS Investment Grade | MBT Bancshares vs. Federated Premier Municipal |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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