Correlation Between Procter Gamble and Cabana Target
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Cabana Target 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 Cabana Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Cabana Target Drawdown, you can compare the effects of market volatilities on Procter Gamble and Cabana Target 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 Cabana Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Cabana Target.
Diversification Opportunities for Procter Gamble and Cabana Target
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Procter and Cabana is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown 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 Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of Procter Gamble i.e., Procter Gamble and Cabana Target go up and down completely randomly.
Pair Corralation between Procter Gamble and Cabana Target
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 2.9 times more return on investment than Cabana Target. However, Procter Gamble is 2.9 times more volatile than Cabana Target Drawdown. It trades about 0.08 of its potential returns per unit of risk. Cabana Target Drawdown is currently generating about 0.11 per unit of risk. If you would invest 14,011 in Procter Gamble on September 2, 2024 and sell it today you would earn a total of 3,915 from holding Procter Gamble or generate 27.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Cabana Target Drawdown
Performance |
| Timeline |
| Procter Gamble |
| Cabana Target Drawdown |
Procter Gamble and Cabana Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Cabana Target
The main advantage of trading using opposite Procter Gamble and Cabana Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Cabana Target 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 Cabana Target will offset losses from the drop in Cabana Target's long position.| Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark | Procter Gamble vs. Estee Lauder Companies |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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