Correlation Between Procter Gamble and Thales SA
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Thales SA 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 Thales SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Thales SA, you can compare the effects of market volatilities on Procter Gamble and Thales SA 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 Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Thales SA.
Diversification Opportunities for Procter Gamble and Thales SA
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Thales is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Thales SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA has no effect on the direction of Procter Gamble i.e., Procter Gamble and Thales SA go up and down completely randomly.
Pair Corralation between Procter Gamble and Thales SA
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.85 times more return on investment than Thales SA. However, Procter Gamble is 1.17 times less risky than Thales SA. It trades about 0.35 of its potential returns per unit of risk. Thales SA is currently generating about -0.42 per unit of risk. If you would invest 16,518 in Procter Gamble on September 1, 2024 and sell it today you would earn a total of 1,408 from holding Procter Gamble or generate 8.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Procter Gamble vs. Thales SA
Performance |
| Timeline |
| Procter Gamble |
| Thales SA |
Procter Gamble and Thales SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Thales SA
The main advantage of trading using opposite Procter Gamble and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Thales SA 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 Thales SA will offset losses from the drop in Thales SA'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 |
| Thales SA vs. Firan Technology Group | Thales SA vs. 808 Renewable Energy | Thales SA vs. Park Electrochemical | Thales SA vs. Innovative Solutions and |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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