Correlation Between Procter Gamble and Mainstay
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Mainstay 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 Mainstay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Mainstay Sp 500, you can compare the effects of market volatilities on Procter Gamble and Mainstay 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 Mainstay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Mainstay.
Diversification Opportunities for Procter Gamble and Mainstay
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Procter and Mainstay is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 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 Mainstay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of Procter Gamble i.e., Procter Gamble and Mainstay go up and down completely randomly.
Pair Corralation between Procter Gamble and Mainstay
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.39 times less return on investment than Mainstay. In addition to that, Procter Gamble is 1.31 times more volatile than Mainstay Sp 500. It trades about 0.08 of its total potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.15 per unit of volatility. If you would invest 6,623 in Mainstay Sp 500 on August 24, 2024 and sell it today you would earn a total of 180.00 from holding Mainstay Sp 500 or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Mainstay Sp 500
Performance |
| Timeline |
| Procter Gamble |
| Mainstay Sp 500 |
Procter Gamble and Mainstay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Mainstay
The main advantage of trading using opposite Procter Gamble and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Mainstay 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 Mainstay will offset losses from the drop in Mainstay's long position.| Procter Gamble vs. Eshallgo Class A | Procter Gamble vs. Amtech Systems | Procter Gamble vs. Gold Fields Ltd | Procter Gamble vs. Aegean Airlines SA |
| Mainstay vs. Champlain Small | Mainstay vs. Tax Managed Mid Small | Mainstay vs. Touchstone Small Cap | Mainstay vs. Small Pany Growth |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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