Correlation Between Procter Gamble and Stepstone
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Stepstone 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 Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Stepstone Group, you can compare the effects of market volatilities on Procter Gamble and Stepstone 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 Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Stepstone.
Diversification Opportunities for Procter Gamble and Stepstone
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Stepstone is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Procter Gamble i.e., Procter Gamble and Stepstone go up and down completely randomly.
Pair Corralation between Procter Gamble and Stepstone
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 4.07 times less return on investment than Stepstone. But when comparing it to its historical volatility, Procter Gamble is 2.31 times less risky than Stepstone. It trades about 0.06 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,661 in Stepstone Group on September 3, 2024 and sell it today you would earn a total of 3,928 from holding Stepstone Group or generate 147.61% 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. Stepstone Group
Performance |
| Timeline |
| Procter Gamble |
| Stepstone Group |
Procter Gamble and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Stepstone
The main advantage of trading using opposite Procter Gamble and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone's long position.| Procter Gamble vs. Highway Holdings Limited | Procter Gamble vs. QCR Holdings | Procter Gamble vs. Partner Communications | Procter Gamble vs. Acumen Pharmaceuticals |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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