Correlation Between Procter Gamble and T REX
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and T REX 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 T REX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and T REX 2X Long, you can compare the effects of market volatilities on Procter Gamble and T REX 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 T REX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and T REX.
Diversification Opportunities for Procter Gamble and T REX
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Procter and MSTU is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and T REX 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T REX 2X 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 T REX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T REX 2X has no effect on the direction of Procter Gamble i.e., Procter Gamble and T REX go up and down completely randomly.
Pair Corralation between Procter Gamble and T REX
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 14.91 times less return on investment than T REX. But when comparing it to its historical volatility, Procter Gamble is 16.3 times less risky than T REX. It trades about 0.37 of its potential returns per unit of risk. T REX 2X Long is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 6,350 in T REX 2X Long on September 3, 2024 and sell it today you would earn a total of 9,511 from holding T REX 2X Long or generate 149.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. T REX 2X Long
Performance |
| Timeline |
| Procter Gamble |
| T REX 2X |
Procter Gamble and T REX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and T REX
The main advantage of trading using opposite Procter Gamble and T REX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, T REX 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 T REX will offset losses from the drop in T REX's long position.| Procter Gamble vs. Highway Holdings Limited | Procter Gamble vs. QCR Holdings | Procter Gamble vs. Partner Communications | Procter Gamble vs. Acumen Pharmaceuticals |
| T REX vs. Tidal Trust II | T REX vs. Tidal Trust II | T REX vs. Direxion Daily META | T REX vs. Direxion Daily META |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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