Correlation Between Procter Gamble and Under Armour
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Under Armour 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 Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Under Armour C, you can compare the effects of market volatilities on Procter Gamble and Under Armour 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 Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Under Armour.
Diversification Opportunities for Procter Gamble and Under Armour
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and Under is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Under Armour C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour C 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 Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour C has no effect on the direction of Procter Gamble i.e., Procter Gamble and Under Armour go up and down completely randomly.
Pair Corralation between Procter Gamble and Under Armour
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.56 times less return on investment than Under Armour. But when comparing it to its historical volatility, Procter Gamble is 5.45 times less risky than Under Armour. It trades about 0.37 of its potential returns per unit of risk. Under Armour C is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 796.00 in Under Armour C on September 3, 2024 and sell it today you would earn a total of 81.00 from holding Under Armour C or generate 10.18% 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. Under Armour C
Performance |
| Timeline |
| Procter Gamble |
| Under Armour C |
Procter Gamble and Under Armour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Under Armour
The main advantage of trading using opposite Procter Gamble and Under Armour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Under Armour 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 Under Armour will offset losses from the drop in Under Armour's long position.| Procter Gamble vs. Highway Holdings Limited | Procter Gamble vs. QCR Holdings | Procter Gamble vs. Partner Communications | Procter Gamble vs. Acumen Pharmaceuticals |
| Under Armour vs. Levi Strauss Co | Under Armour vs. Columbia Sportswear | Under Armour vs. Hanesbrands | Under Armour vs. PVH Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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