Correlation Between Procter Gamble and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Northern Graphite 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 Northern Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Northern Graphite, you can compare the effects of market volatilities on Procter Gamble and Northern Graphite 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 Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Northern Graphite.
Diversification Opportunities for Procter Gamble and Northern Graphite
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Northern is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite 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 Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of Procter Gamble i.e., Procter Gamble and Northern Graphite go up and down completely randomly.
Pair Corralation between Procter Gamble and Northern Graphite
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.67 times less return on investment than Northern Graphite. But when comparing it to its historical volatility, Procter Gamble is 10.07 times less risky than Northern Graphite. It trades about 0.08 of its potential returns per unit of risk. Northern Graphite is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 8.90 in Northern Graphite on August 30, 2024 and sell it today you would lose (3.44) from holding Northern Graphite or give up 38.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Northern Graphite
Performance |
| Timeline |
| Procter Gamble |
| Northern Graphite |
Procter Gamble and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Northern Graphite
The main advantage of trading using opposite Procter Gamble and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark |
| Northern Graphite vs. Silver Hammer Mining | Northern Graphite vs. Reyna Silver Corp | Northern Graphite vs. Guanajuato Silver | Northern Graphite vs. Silver One Resources |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |