Correlation Between Procter Gamble and SGI Enhanced
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and SGI Enhanced 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 SGI Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and SGI Enhanced Nasdaq 100, you can compare the effects of market volatilities on Procter Gamble and SGI Enhanced 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 SGI Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and SGI Enhanced.
Diversification Opportunities for Procter Gamble and SGI Enhanced
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and SGI is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and SGI Enhanced Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGI Enhanced Nasdaq 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 SGI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGI Enhanced Nasdaq has no effect on the direction of Procter Gamble i.e., Procter Gamble and SGI Enhanced go up and down completely randomly.
Pair Corralation between Procter Gamble and SGI Enhanced
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.86 times more return on investment than SGI Enhanced. However, Procter Gamble is 1.16 times less risky than SGI Enhanced. It trades about 0.08 of its potential returns per unit of risk. SGI Enhanced Nasdaq 100 is currently generating about 0.07 per unit of risk. If you would invest 16,271 in Procter Gamble on September 1, 2024 and sell it today you would earn a total of 1,655 from holding Procter Gamble or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Procter Gamble vs. SGI Enhanced Nasdaq 100
Performance |
| Timeline |
| Procter Gamble |
| SGI Enhanced Nasdaq |
Procter Gamble and SGI Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and SGI Enhanced
The main advantage of trading using opposite Procter Gamble and SGI Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, SGI Enhanced 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 SGI Enhanced will offset losses from the drop in SGI Enhanced's long position.| Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark | Procter Gamble vs. Estee Lauder Companies |
| SGI Enhanced vs. Global X SP | SGI Enhanced vs. Amplify CWP Enhanced | SGI Enhanced vs. JPMorgan Equity Premium |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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