Correlation Between Procter Gamble and M Tron
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and M Tron 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 M Tron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and M tron Industries, you can compare the effects of market volatilities on Procter Gamble and M Tron 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 M Tron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and M Tron.
Diversification Opportunities for Procter Gamble and M Tron
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and MPTI is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and M tron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M tron Industries 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 M Tron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M tron Industries has no effect on the direction of Procter Gamble i.e., Procter Gamble and M Tron go up and down completely randomly.
Pair Corralation between Procter Gamble and M Tron
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 11.3 times less return on investment than M Tron. But when comparing it to its historical volatility, Procter Gamble is 4.04 times less risky than M Tron. It trades about 0.1 of its potential returns per unit of risk. M tron Industries is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 4,169 in M tron Industries on August 30, 2024 and sell it today you would earn a total of 2,368 from holding M tron Industries or generate 56.8% 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. M tron Industries
Performance |
| Timeline |
| Procter Gamble |
| M tron Industries |
Procter Gamble and M Tron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and M Tron
The main advantage of trading using opposite Procter Gamble and M Tron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, M Tron 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 M Tron will offset losses from the drop in M Tron's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark |
| M Tron vs. Ieh Corp | M Tron vs. Micropac Industries | M Tron vs. Deswell Industries | M Tron vs. Methode Electronics |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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