Correlation Between Beauty Health and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Beauty Health 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 Beauty Health and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beauty Health Co and Procter Gamble, you can compare the effects of market volatilities on Beauty Health 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 Beauty Health with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beauty Health and Procter Gamble.
Diversification Opportunities for Beauty Health and Procter Gamble
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Beauty and Procter is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Health Co and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Beauty Health 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 Beauty Health Co 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 Beauty Health i.e., Beauty Health and Procter Gamble go up and down completely randomly.
Pair Corralation between Beauty Health and Procter Gamble
Given the investment horizon of 90 days Beauty Health Co is expected to under-perform the Procter Gamble. In addition to that, Beauty Health is 6.53 times more volatile than Procter Gamble. It trades about -0.03 of its total potential returns per unit of risk. Procter Gamble is currently generating about 0.06 per unit of volatility. If you would invest 13,147 in Procter Gamble on November 1, 2024 and sell it today you would earn a total of 3,594 from holding Procter Gamble or generate 27.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beauty Health Co vs. Procter Gamble
Performance |
| Timeline |
| Beauty Health |
| Procter Gamble |
Beauty Health and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beauty Health and Procter Gamble
The main advantage of trading using opposite Beauty Health and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beauty Health 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.| Beauty Health vs. Clear Secure | Beauty Health vs. GXO Logistics | Beauty Health vs. Doximity | Beauty Health vs. Figs Inc |
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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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