Correlation Between Procter Gamble and Magellan Midstream
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Magellan Midstream 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 Magellan Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Magellan Midstream Partners, you can compare the effects of market volatilities on Procter Gamble and Magellan Midstream 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 Magellan Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Magellan Midstream.
Diversification Opportunities for Procter Gamble and Magellan Midstream
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and Magellan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Magellan Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Midstream 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 Magellan Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Midstream has no effect on the direction of Procter Gamble i.e., Procter Gamble and Magellan Midstream go up and down completely randomly.
Pair Corralation between Procter Gamble and Magellan Midstream
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 2.9 times less return on investment than Magellan Midstream. But when comparing it to its historical volatility, Procter Gamble is 1.06 times less risky than Magellan Midstream. It trades about 0.07 of its potential returns per unit of risk. Magellan Midstream Partners is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 6,158 in Magellan Midstream Partners on August 31, 2024 and sell it today you would earn a total of 393.00 from holding Magellan Midstream Partners or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.56% |
| Values | Daily Returns |
Procter Gamble vs. Magellan Midstream Partners
Performance |
| Timeline |
| Procter Gamble |
| Magellan Midstream |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Procter Gamble and Magellan Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Magellan Midstream
The main advantage of trading using opposite Procter Gamble and Magellan Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Magellan Midstream 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 Magellan Midstream will offset losses from the drop in Magellan Midstream's long position.| Procter Gamble vs. Aquagold International | Procter Gamble vs. Morningstar Unconstrained Allocation | Procter Gamble vs. Thrivent High Yield | Procter Gamble vs. Via Renewables |
| Magellan Midstream vs. Kinder Morgan | Magellan Midstream vs. Enterprise Products Partners | Magellan Midstream vs. Williams Companies | Magellan Midstream vs. MPLX LP |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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