Correlation Between Procter Gamble and Semtech
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Semtech 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 Semtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Semtech, you can compare the effects of market volatilities on Procter Gamble and Semtech 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 Semtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Semtech.
Diversification Opportunities for Procter Gamble and Semtech
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Procter and Semtech is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech 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 Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Procter Gamble i.e., Procter Gamble and Semtech go up and down completely randomly.
Pair Corralation between Procter Gamble and Semtech
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 6.15 times less return on investment than Semtech. But when comparing it to its historical volatility, Procter Gamble is 4.17 times less risky than Semtech. It trades about 0.08 of its potential returns per unit of risk. Semtech is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,818 in Semtech on August 31, 2024 and sell it today you would earn a total of 2,586 from holding Semtech or generate 67.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Semtech
Performance |
| Timeline |
| Procter Gamble |
| Semtech |
Procter Gamble and Semtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Semtech
The main advantage of trading using opposite Procter Gamble and Semtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Semtech 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 Semtech will offset losses from the drop in Semtech'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 |
| Semtech vs. MACOM Technology Solutions | Semtech vs. FormFactor | Semtech vs. MaxLinear | Semtech vs. nLIGHT 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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