Correlation Between Procter Gamble and Mayville Engineering
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Mayville Engineering 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 Mayville Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Mayville Engineering Co, you can compare the effects of market volatilities on Procter Gamble and Mayville Engineering 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 Mayville Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Mayville Engineering.
Diversification Opportunities for Procter Gamble and Mayville Engineering
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and Mayville is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Mayville Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayville Engineering 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 Mayville Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayville Engineering has no effect on the direction of Procter Gamble i.e., Procter Gamble and Mayville Engineering go up and down completely randomly.
Pair Corralation between Procter Gamble and Mayville Engineering
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 2.14 times less return on investment than Mayville Engineering. But when comparing it to its historical volatility, Procter Gamble is 2.95 times less risky than Mayville Engineering. It trades about 0.07 of its potential returns per unit of risk. Mayville Engineering Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,283 in Mayville Engineering Co on August 27, 2024 and sell it today you would earn a total of 416.00 from holding Mayville Engineering Co or generate 32.42% 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. Mayville Engineering Co
Performance |
| Timeline |
| Procter Gamble |
| Mayville Engineering |
Procter Gamble and Mayville Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Mayville Engineering
The main advantage of trading using opposite Procter Gamble and Mayville Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Mayville Engineering 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 Mayville Engineering will offset losses from the drop in Mayville Engineering'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 |
| Mayville Engineering vs. Haynes International | Mayville Engineering vs. Insteel Industries | Mayville Engineering vs. Gulf Island Fabrication | Mayville Engineering vs. ESAB Corp |
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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