Correlation Between Schlumberger and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Schlumberger 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 Schlumberger and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schlumberger Limited and The Procter Gamble, you can compare the effects of market volatilities on Schlumberger 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 Schlumberger with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schlumberger and Procter Gamble.
Diversification Opportunities for Schlumberger and Procter Gamble
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Schlumberger and Procter is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Schlumberger Limited and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Schlumberger 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 Schlumberger Limited 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 Schlumberger i.e., Schlumberger and Procter Gamble go up and down completely randomly.
Pair Corralation between Schlumberger and Procter Gamble
Assuming the 90 days trading horizon Schlumberger Limited is expected to under-perform the Procter Gamble. But the stock apears to be less risky and, when comparing its historical volatility, Schlumberger Limited is 1.17 times less risky than Procter Gamble. The stock trades about -0.14 of its potential returns per unit of risk. The The Procter Gamble is currently generating about -0.12 of returns per unit of risk over similar time horizon. 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 |
Schlumberger Limited vs. The Procter Gamble
Performance |
| Timeline |
| Schlumberger Limited |
| Procter Gamble |
Schlumberger and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schlumberger and Procter Gamble
The main advantage of trading using opposite Schlumberger and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schlumberger 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.| Schlumberger vs. Multilaser Industrial SA | Schlumberger vs. Automatic Data Processing | Schlumberger vs. METISA Metalrgica Timboense | Schlumberger vs. Tres Tentos Agroindustrial |
| Procter Gamble vs. Unity Software | Procter Gamble vs. MAHLE Metal Leve | Procter Gamble vs. Darden Restaurants, | Procter Gamble vs. TAL Education Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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