Correlation Between Procter Gamble and ProShares
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and ProShares 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 ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and ProShares SP MidCap, you can compare the effects of market volatilities on Procter Gamble and ProShares 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 ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and ProShares.
Diversification Opportunities for Procter Gamble and ProShares
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and ProShares is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and ProShares SP MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP MidCap 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 ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP MidCap has no effect on the direction of Procter Gamble i.e., Procter Gamble and ProShares go up and down completely randomly.
Pair Corralation between Procter Gamble and ProShares
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.22 times less return on investment than ProShares. In addition to that, Procter Gamble is 1.01 times more volatile than ProShares SP MidCap. It trades about 0.07 of its total potential returns per unit of risk. ProShares SP MidCap is currently generating about 0.09 per unit of volatility. If you would invest 6,622 in ProShares SP MidCap on August 27, 2024 and sell it today you would earn a total of 2,142 from holding ProShares SP MidCap or generate 32.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. ProShares SP MidCap
Performance |
| Timeline |
| Procter Gamble |
| ProShares SP MidCap |
Procter Gamble and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and ProShares
The main advantage of trading using opposite Procter Gamble and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, ProShares 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 ProShares will offset losses from the drop in ProShares' long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| ProShares vs. Vanguard Mid Cap Index | ProShares vs. iShares Core SP | ProShares vs. SPDR SP MIDCAP | ProShares vs. First Trust Dorsey |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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