Correlation Between Procter Gamble and SiteOne Landscape
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and SiteOne Landscape 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 SiteOne Landscape into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and SiteOne Landscape Supply, you can compare the effects of market volatilities on Procter Gamble and SiteOne Landscape 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 SiteOne Landscape. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and SiteOne Landscape.
Diversification Opportunities for Procter Gamble and SiteOne Landscape
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and SiteOne is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and SiteOne Landscape Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiteOne Landscape Supply 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 SiteOne Landscape. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiteOne Landscape Supply has no effect on the direction of Procter Gamble i.e., Procter Gamble and SiteOne Landscape go up and down completely randomly.
Pair Corralation between Procter Gamble and SiteOne Landscape
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.69 times less return on investment than SiteOne Landscape. But when comparing it to its historical volatility, Procter Gamble is 2.07 times less risky than SiteOne Landscape. It trades about 0.08 of its potential returns per unit of risk. SiteOne Landscape Supply is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 13,919 in SiteOne Landscape Supply on August 24, 2024 and sell it today you would earn a total of 395.00 from holding SiteOne Landscape Supply or generate 2.84% 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. SiteOne Landscape Supply
Performance |
| Timeline |
| Procter Gamble |
| SiteOne Landscape Supply |
Procter Gamble and SiteOne Landscape Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and SiteOne Landscape
The main advantage of trading using opposite Procter Gamble and SiteOne Landscape positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, SiteOne Landscape 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 SiteOne Landscape will offset losses from the drop in SiteOne Landscape's 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 |
| SiteOne Landscape vs. DXP Enterprises | SiteOne Landscape vs. Applied Industrial Technologies | SiteOne Landscape vs. Ferguson Plc | SiteOne Landscape vs. Global Industrial Co |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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