Correlation Between Procter Gamble and Seagate Technology
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Seagate Technology 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 Seagate Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Seagate Technology PLC, you can compare the effects of market volatilities on Procter Gamble and Seagate Technology 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 Seagate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Seagate Technology.
Diversification Opportunities for Procter Gamble and Seagate Technology
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Procter and Seagate is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Seagate Technology PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology PLC 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 Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology PLC has no effect on the direction of Procter Gamble i.e., Procter Gamble and Seagate Technology go up and down completely randomly.
Pair Corralation between Procter Gamble and Seagate Technology
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.83 times more return on investment than Seagate Technology. However, Procter Gamble is 1.2 times less risky than Seagate Technology. It trades about 0.08 of its potential returns per unit of risk. Seagate Technology PLC is currently generating about -0.11 per unit of risk. If you would invest 16,958 in Procter Gamble on August 24, 2024 and sell it today you would earn a total of 317.00 from holding Procter Gamble or generate 1.87% 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. Seagate Technology PLC
Performance |
| Timeline |
| Procter Gamble |
| Seagate Technology PLC |
Procter Gamble and Seagate Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Seagate Technology
The main advantage of trading using opposite Procter Gamble and Seagate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Seagate Technology 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 Seagate Technology will offset losses from the drop in Seagate Technology's long position.| Procter Gamble vs. Honest Company | Procter Gamble vs. Hims Hers Health | Procter Gamble vs. Kimberly Clark | Procter Gamble vs. Colgate Palmolive |
| Seagate Technology vs. NetApp Inc | Seagate Technology vs. Dell Technologies | Seagate Technology vs. Pure Storage | Seagate Technology vs. HP 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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