Correlation Between Procter Gamble and Safe
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Safe 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 Safe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Safe, you can compare the effects of market volatilities on Procter Gamble and Safe 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 Safe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Safe.
Diversification Opportunities for Procter Gamble and Safe
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Procter and Safe is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Safe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe 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 Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe has no effect on the direction of Procter Gamble i.e., Procter Gamble and Safe go up and down completely randomly.
Pair Corralation between Procter Gamble and Safe
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.14 times more return on investment than Safe. However, Procter Gamble is 7.15 times less risky than Safe. It trades about 0.07 of its potential returns per unit of risk. Safe is currently generating about -0.05 per unit of risk. If you would invest 13,540 in Procter Gamble on August 27, 2024 and sell it today you would earn a total of 4,088 from holding Procter Gamble or generate 30.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 29.67% |
| Values | Daily Returns |
Procter Gamble vs. Safe
Performance |
| Timeline |
| Procter Gamble |
| Safe |
Procter Gamble and Safe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Safe
The main advantage of trading using opposite Procter Gamble and Safe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Safe 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 Safe will offset losses from the drop in Safe'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 |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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