Correlation Between Procter Gamble and SPDR DoubleLine
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and SPDR DoubleLine 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 SPDR DoubleLine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and SPDR DoubleLine Total, you can compare the effects of market volatilities on Procter Gamble and SPDR DoubleLine 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 SPDR DoubleLine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and SPDR DoubleLine.
Diversification Opportunities for Procter Gamble and SPDR DoubleLine
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Procter and SPDR is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and SPDR DoubleLine Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR DoubleLine Total 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 SPDR DoubleLine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR DoubleLine Total has no effect on the direction of Procter Gamble i.e., Procter Gamble and SPDR DoubleLine go up and down completely randomly.
Pair Corralation between Procter Gamble and SPDR DoubleLine
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 3.25 times more return on investment than SPDR DoubleLine. However, Procter Gamble is 3.25 times more volatile than SPDR DoubleLine Total. It trades about 0.28 of its potential returns per unit of risk. SPDR DoubleLine Total is currently generating about 0.09 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. SPDR DoubleLine Total
Performance |
| Timeline |
| Procter Gamble |
| SPDR DoubleLine Total |
Procter Gamble and SPDR DoubleLine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and SPDR DoubleLine
The main advantage of trading using opposite Procter Gamble and SPDR DoubleLine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, SPDR DoubleLine 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 SPDR DoubleLine will offset losses from the drop in SPDR DoubleLine's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark |
| SPDR DoubleLine vs. PIMCO Active Bond | SPDR DoubleLine vs. SPDR Blackstone Senior | SPDR DoubleLine vs. SPDR Barclays Intermediate | SPDR DoubleLine vs. SPDR Bloomberg Investment |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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