Correlation Between Procter Gamble and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Procter Gamble and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Ross Stores.
Diversification Opportunities for Procter Gamble and Ross Stores
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Procter and Ross is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Procter Gamble i.e., Procter Gamble and Ross Stores go up and down completely randomly.
Pair Corralation between Procter Gamble and Ross Stores
Assuming the 90 days trading horizon The Procter Gamble is expected to generate 0.92 times more return on investment than Ross Stores. However, The Procter Gamble is 1.09 times less risky than Ross Stores. It trades about 0.12 of its potential returns per unit of risk. Ross Stores is currently generating about 0.1 per unit of risk. If you would invest 5,565 in The Procter Gamble on September 1, 2024 and sell it today you would earn a total of 2,018 from holding The Procter Gamble or generate 36.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.76% |
| Values | Daily Returns |
The Procter Gamble vs. Ross Stores
Performance |
| Timeline |
| Procter Gamble |
| Ross Stores |
Procter Gamble and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Ross Stores
The main advantage of trading using opposite Procter Gamble and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Procter Gamble vs. Charter Communications | Procter Gamble vs. Spotify Technology SA | Procter Gamble vs. Waste Management | Procter Gamble vs. Electronic Arts |
| Ross Stores vs. BTG Pactual Logstica | Ross Stores vs. Plano Plano Desenvolvimento | Ross Stores vs. Cable One | Ross Stores vs. ATMA Participaes 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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