Correlation Between Procter Gamble and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and IShares Trust 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 IShares Trust 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 iShares Trust , you can compare the effects of market volatilities on Procter Gamble and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and IShares Trust.
Diversification Opportunities for Procter Gamble and IShares Trust
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Procter and IShares is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Procter Gamble i.e., Procter Gamble and IShares Trust go up and down completely randomly.
Pair Corralation between Procter Gamble and IShares Trust
Assuming the 90 days trading horizon Procter Gamble is expected to generate 2.83 times less return on investment than IShares Trust. But when comparing it to its historical volatility, The Procter Gamble is 1.07 times less risky than IShares Trust. It trades about 0.18 of its potential returns per unit of risk. iShares Trust is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 8,901 in iShares Trust on August 24, 2024 and sell it today you would earn a total of 1,031 from holding iShares Trust or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Procter Gamble vs. iShares Trust
Performance |
| Timeline |
| Procter Gamble |
| iShares Trust |
Procter Gamble and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and IShares Trust
The main advantage of trading using opposite Procter Gamble and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| Procter Gamble vs. Waste Management | Procter Gamble vs. TAL Education Group | Procter Gamble vs. Zoom Video Communications | Procter Gamble vs. Unity Software |
| IShares Trust vs. iShares BMFBovespa Small | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares iShares |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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