Correlation Between Procter Gamble and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Whirlpool 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 Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Whirlpool, you can compare the effects of market volatilities on Procter Gamble and Whirlpool 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 Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Whirlpool.
Diversification Opportunities for Procter Gamble and Whirlpool
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Whirlpool is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Procter Gamble i.e., Procter Gamble and Whirlpool go up and down completely randomly.
Pair Corralation between Procter Gamble and Whirlpool
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.4 times more return on investment than Whirlpool. However, Procter Gamble is 2.51 times less risky than Whirlpool. It trades about 0.07 of its potential returns per unit of risk. Whirlpool is currently generating about 0.0 per unit of risk. If you would invest 13,540 in Procter Gamble on August 27, 2024 and sell it today you would earn a total of 4,088 from holding Procter Gamble or generate 30.19% 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. Whirlpool
Performance |
| Timeline |
| Procter Gamble |
| Whirlpool |
Procter Gamble and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Whirlpool
The main advantage of trading using opposite Procter Gamble and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool'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 |
| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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