Correlation Between Procter Gamble and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and RBC Bearings 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 RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and RBC Bearings, you can compare the effects of market volatilities on Procter Gamble and RBC Bearings 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 RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and RBC Bearings.
Diversification Opportunities for Procter Gamble and RBC Bearings
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Procter and RBC is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and RBC Bearings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of Procter Gamble i.e., Procter Gamble and RBC Bearings go up and down completely randomly.
Pair Corralation between Procter Gamble and RBC Bearings
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.71 times more return on investment than RBC Bearings. However, Procter Gamble is 1.41 times less risky than RBC Bearings. It trades about 0.04 of its potential returns per unit of risk. RBC Bearings is currently generating about -0.09 per unit of risk. If you would invest 16,935 in Procter Gamble on August 24, 2024 and sell it today you would earn a total of 340.00 from holding Procter Gamble or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 57.81% |
| Values | Daily Returns |
Procter Gamble vs. RBC Bearings
Performance |
| Timeline |
| Procter Gamble |
| RBC Bearings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Procter Gamble and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and RBC Bearings
The main advantage of trading using opposite Procter Gamble and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, RBC Bearings 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 RBC Bearings will offset losses from the drop in RBC Bearings' 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 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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