Correlation Between Procter Gamble and Schlumberger
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Schlumberger 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 Schlumberger 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 Schlumberger Limited, you can compare the effects of market volatilities on Procter Gamble and Schlumberger 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 Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Schlumberger.
Diversification Opportunities for Procter Gamble and Schlumberger
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Procter and Schlumberger is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of Procter Gamble i.e., Procter Gamble and Schlumberger go up and down completely randomly.
Pair Corralation between Procter Gamble and Schlumberger
Assuming the 90 days trading horizon The Procter Gamble is expected to generate 1.17 times more return on investment than Schlumberger. However, Procter Gamble is 1.17 times more volatile than Schlumberger Limited. It trades about -0.12 of its potential returns per unit of risk. Schlumberger Limited is currently generating about -0.14 per unit of risk. If you would invest 7,300 in The Procter Gamble on October 12, 2024 and sell it today you would lose (393.00) from holding The Procter Gamble or give up 5.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Procter Gamble vs. Schlumberger Limited
Performance |
| Timeline |
| Procter Gamble |
| Schlumberger Limited |
Procter Gamble and Schlumberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Schlumberger
The main advantage of trading using opposite Procter Gamble and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.| Procter Gamble vs. Unity Software | Procter Gamble vs. MAHLE Metal Leve | Procter Gamble vs. Darden Restaurants, | Procter Gamble vs. TAL Education Group |
| Schlumberger vs. Multilaser Industrial SA | Schlumberger vs. Automatic Data Processing | Schlumberger vs. METISA Metalrgica Timboense | Schlumberger vs. Tres Tentos Agroindustrial |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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