Correlation Between Procter Gamble and Constellation Brands
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Constellation Brands 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 Constellation Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Constellation Brands Class, you can compare the effects of market volatilities on Procter Gamble and Constellation Brands 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 Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Constellation Brands.
Diversification Opportunities for Procter Gamble and Constellation Brands
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Procter and Constellation is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands 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 Constellation Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Brands has no effect on the direction of Procter Gamble i.e., Procter Gamble and Constellation Brands go up and down completely randomly.
Pair Corralation between Procter Gamble and Constellation Brands
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.77 times more return on investment than Constellation Brands. However, Procter Gamble is 1.3 times less risky than Constellation Brands. It trades about 0.28 of its potential returns per unit of risk. Constellation Brands Class is currently generating about 0.02 per unit of risk. If you would invest 16,717 in Procter Gamble on August 30, 2024 and sell it today you would earn a total of 1,219 from holding Procter Gamble or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Constellation Brands Class
Performance |
| Timeline |
| Procter Gamble |
| Constellation Brands |
Procter Gamble and Constellation Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Constellation Brands
The main advantage of trading using opposite Procter Gamble and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Constellation Brands 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 Constellation Brands will offset losses from the drop in Constellation Brands' long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark |
| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |