Correlation Between Procter Gamble and ATT
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and ATT Inc, you can compare the effects of market volatilities on Procter Gamble and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and ATT.
Diversification Opportunities for Procter Gamble and ATT
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and ATT is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Procter Gamble i.e., Procter Gamble and ATT go up and down completely randomly.
Pair Corralation between Procter Gamble and ATT
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 4.12 times less return on investment than ATT. But when comparing it to its historical volatility, Procter Gamble is 1.28 times less risky than ATT. It trades about 0.07 of its potential returns per unit of risk. ATT Inc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,951 in ATT Inc on August 26, 2024 and sell it today you would earn a total of 367.00 from holding ATT Inc or generate 18.81% 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. ATT Inc
Performance |
| Timeline |
| Procter Gamble |
| ATT Inc |
Procter Gamble and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and ATT
The main advantage of trading using opposite Procter Gamble and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| ATT vs. Liberty Broadband Srs | ATT vs. Ribbon Communications | ATT vs. Liberty Broadband Srs | ATT vs. Shenandoah Telecommunications 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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