Correlation Between Procter Gamble and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and SPDR SP 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 SP 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 SP Retail, you can compare the effects of market volatilities on Procter Gamble and SPDR SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and SPDR SP.
Diversification Opportunities for Procter Gamble and SPDR SP
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Procter and SPDR is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and SPDR SP Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Retail 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Retail has no effect on the direction of Procter Gamble i.e., Procter Gamble and SPDR SP go up and down completely randomly.
Pair Corralation between Procter Gamble and SPDR SP
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.77 times more return on investment than SPDR SP. However, Procter Gamble is 1.3 times less risky than SPDR SP. It trades about 0.08 of its potential returns per unit of risk. SPDR SP Retail is currently generating about 0.04 per unit of risk. If you would invest 16,271 in Procter Gamble on August 30, 2024 and sell it today you would earn a total of 1,665 from holding Procter Gamble or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. SPDR SP Retail
Performance |
| Timeline |
| Procter Gamble |
| SPDR SP Retail |
Procter Gamble and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and SPDR SP
The main advantage of trading using opposite Procter Gamble and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP'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 SP vs. SPDR SP Homebuilders | SPDR SP vs. Consumer Discretionary Select | SPDR SP vs. SPDR SP Metals | SPDR SP vs. Industrial Select Sector |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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