Correlation Between Procter Gamble and NN
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and NN 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 NN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and NN Inc, you can compare the effects of market volatilities on Procter Gamble and NN 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 NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and NN.
Diversification Opportunities for Procter Gamble and NN
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Procter and NN is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc 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 NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Procter Gamble i.e., Procter Gamble and NN go up and down completely randomly.
Pair Corralation between Procter Gamble and NN
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.22 times more return on investment than NN. However, Procter Gamble is 4.56 times less risky than NN. It trades about 0.19 of its potential returns per unit of risk. NN Inc is currently generating about 0.03 per unit of risk. If you would invest 16,930 in Procter Gamble on August 28, 2024 and sell it today you would earn a total of 809.00 from holding Procter Gamble or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. NN Inc
Performance |
| Timeline |
| Procter Gamble |
| NN Inc |
Procter Gamble and NN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and NN
The main advantage of trading using opposite Procter Gamble and NN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, NN 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 NN will offset losses from the drop in NN's long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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