Correlation Between Procter Gamble and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Costco Wholesale 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 Costco Wholesale 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 Costco Wholesale, you can compare the effects of market volatilities on Procter Gamble and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Costco Wholesale.
Diversification Opportunities for Procter Gamble and Costco Wholesale
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Procter and Costco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale has no effect on the direction of Procter Gamble i.e., Procter Gamble and Costco Wholesale go up and down completely randomly.
Pair Corralation between Procter Gamble and Costco Wholesale
Assuming the 90 days trading horizon Procter Gamble is expected to generate 1.42 times less return on investment than Costco Wholesale. In addition to that, Procter Gamble is 1.01 times more volatile than Costco Wholesale. It trades about 0.12 of its total potential returns per unit of risk. Costco Wholesale is currently generating about 0.17 per unit of volatility. If you would invest 10,659 in Costco Wholesale on September 1, 2024 and sell it today you would earn a total of 3,963 from holding Costco Wholesale or generate 37.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Procter Gamble vs. Costco Wholesale
Performance |
| Timeline |
| Procter Gamble |
| Costco Wholesale |
Procter Gamble and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Costco Wholesale
The main advantage of trading using opposite Procter Gamble and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| Procter Gamble vs. Charter Communications | Procter Gamble vs. Spotify Technology SA | Procter Gamble vs. Waste Management | Procter Gamble vs. Electronic Arts |
| Costco Wholesale vs. Fras le SA | Costco Wholesale vs. Energisa SA | Costco Wholesale vs. Clave Indices De | Costco Wholesale vs. BTG Pactual Logstica |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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