Correlation Between Gen Digital and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Gen Digital and Procter Gamble 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 Gen Digital and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gen Digital and The Procter Gamble, you can compare the effects of market volatilities on Gen Digital and Procter Gamble 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 Gen Digital with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gen Digital and Procter Gamble.
Diversification Opportunities for Gen Digital and Procter Gamble
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gen and Procter is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Gen Digital 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 Gen Digital are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Gen Digital i.e., Gen Digital and Procter Gamble go up and down completely randomly.
Pair Corralation between Gen Digital and Procter Gamble
Assuming the 90 days trading horizon Gen Digital is expected to generate 0.8 times more return on investment than Procter Gamble. However, Gen Digital is 1.24 times less risky than Procter Gamble. It trades about -0.22 of its potential returns per unit of risk. The Procter Gamble is currently generating about -0.24 per unit of risk. If you would invest 17,893 in Gen Digital on October 28, 2024 and sell it today you would lose (893.00) from holding Gen Digital or give up 4.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gen Digital vs. The Procter Gamble
Performance |
| Timeline |
| Gen Digital |
| Procter Gamble |
Gen Digital and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gen Digital and Procter Gamble
The main advantage of trading using opposite Gen Digital and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gen Digital position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.| Gen Digital vs. Monster Beverage | Gen Digital vs. Pure Storage, | Gen Digital vs. United Natural Foods, | Gen Digital vs. Nordon Indstrias Metalrgicas |
| Procter Gamble vs. Zebra Technologies | Procter Gamble vs. Jefferies Financial Group | Procter Gamble vs. Ares Management | Procter Gamble vs. Bread Financial Holdings |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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