Correlation Between Procter Gamble and Companhia Brasileira
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Companhia Brasileira 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 Companhia Brasileira 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 Companhia Brasileira de, you can compare the effects of market volatilities on Procter Gamble and Companhia Brasileira 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 Companhia Brasileira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Companhia Brasileira.
Diversification Opportunities for Procter Gamble and Companhia Brasileira
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Companhia is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Companhia Brasileira de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Brasileira 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 Companhia Brasileira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Brasileira has no effect on the direction of Procter Gamble i.e., Procter Gamble and Companhia Brasileira go up and down completely randomly.
Pair Corralation between Procter Gamble and Companhia Brasileira
Assuming the 90 days trading horizon The Procter Gamble is expected to generate 0.45 times more return on investment than Companhia Brasileira. However, The Procter Gamble is 2.21 times less risky than Companhia Brasileira. It trades about 0.49 of its potential returns per unit of risk. Companhia Brasileira de is currently generating about -0.28 per unit of risk. If you would invest 6,852 in The Procter Gamble on August 31, 2024 and sell it today you would earn a total of 848.00 from holding The Procter Gamble or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Procter Gamble vs. Companhia Brasileira de
Performance |
| Timeline |
| Procter Gamble |
| Companhia Brasileira |
Procter Gamble and Companhia Brasileira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Companhia Brasileira
The main advantage of trading using opposite Procter Gamble and Companhia Brasileira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Companhia Brasileira 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 Companhia Brasileira will offset losses from the drop in Companhia Brasileira's long position.| Procter Gamble vs. METISA Metalrgica Timboense | Procter Gamble vs. Unity Software | Procter Gamble vs. Taiwan Semiconductor Manufacturing | Procter Gamble vs. American Airlines Group |
| Companhia Brasileira vs. Atacado SA | Companhia Brasileira vs. Sendas Distribuidora SA | Companhia Brasileira vs. Natura Co Holding | Companhia Brasileira vs. Lojas Renner SA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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