Correlation Between Procter Gamble and Safety Shot
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Safety Shot 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 Safety Shot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Safety Shot, you can compare the effects of market volatilities on Procter Gamble and Safety Shot 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 Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Safety Shot.
Diversification Opportunities for Procter Gamble and Safety Shot
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Procter and Safety is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Procter Gamble i.e., Procter Gamble and Safety Shot go up and down completely randomly.
Pair Corralation between Procter Gamble and Safety Shot
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 6.03 times less return on investment than Safety Shot. But when comparing it to its historical volatility, Procter Gamble is 8.34 times less risky than Safety Shot. It trades about 0.05 of its potential returns per unit of risk. Safety Shot is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Safety Shot on August 31, 2024 and sell it today you would lose (1.00) from holding Safety Shot or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Procter Gamble vs. Safety Shot
Performance |
| Timeline |
| Procter Gamble |
| Safety Shot |
Procter Gamble and Safety Shot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Safety Shot
The main advantage of trading using opposite Procter Gamble and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot's long position.| Procter Gamble vs. Aquagold International | Procter Gamble vs. Morningstar Unconstrained Allocation | Procter Gamble vs. Thrivent High Yield | Procter Gamble vs. Via Renewables |
| Safety Shot vs. The Coca Cola | Safety Shot vs. National Beverage Corp | Safety Shot vs. Keurig Dr Pepper | Safety Shot vs. Coca Cola Femsa SAB |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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