Correlation Between Procter Gamble and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Automatic Data 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 Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Procter Gamble and Automatic Data Processing, you can compare the effects of market volatilities on Procter Gamble and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Automatic Data.
Diversification Opportunities for Procter Gamble and Automatic Data
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Procter and Automatic is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 The Procter Gamble are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Procter Gamble i.e., Procter Gamble and Automatic Data go up and down completely randomly.
Pair Corralation between Procter Gamble and Automatic Data
Assuming the 90 days trading horizon The Procter Gamble is expected to generate 1.05 times more return on investment than Automatic Data. However, Procter Gamble is 1.05 times more volatile than Automatic Data Processing. It trades about 0.27 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.27 per unit of risk. If you would invest 6,909 in The Procter Gamble on August 27, 2024 and sell it today you would earn a total of 427.00 from holding The Procter Gamble or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Procter Gamble vs. Automatic Data Processing
Performance |
| Timeline |
| Procter Gamble |
| Automatic Data Processing |
Procter Gamble and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Automatic Data
The main advantage of trading using opposite Procter Gamble and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Procter Gamble vs. Verizon Communications | Procter Gamble vs. Micron Technology | Procter Gamble vs. Southwest Airlines Co | Procter Gamble vs. Align Technology |
| Automatic Data vs. Fras le SA | Automatic Data vs. Clave Indices De | Automatic Data vs. BTG Pactual Logstica | Automatic Data vs. Telefonaktiebolaget LM Ericsson |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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