Correlation Between Under Armour and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Under Armour 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 Under Armour and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and Procter Gamble, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Procter Gamble.
Diversification Opportunities for Under Armour and Procter Gamble
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Under and Procter is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and Procter Gamble go up and down completely randomly.
Pair Corralation between Under Armour and Procter Gamble
Allowing for the 90-day total investment horizon Under Armour is expected to generate 1.62 times less return on investment than Procter Gamble. In addition to that, Under Armour is 3.05 times more volatile than Procter Gamble. It trades about 0.01 of its total potential returns per unit of risk. Procter Gamble is currently generating about 0.05 per unit of volatility. If you would invest 14,487 in Procter Gamble on September 3, 2024 and sell it today you would earn a total of 3,439 from holding Procter Gamble or generate 23.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour C vs. Procter Gamble
Performance |
| Timeline |
| Under Armour C |
| Procter Gamble |
Under Armour and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Procter Gamble
The main advantage of trading using opposite Under Armour and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.| Under Armour vs. Levi Strauss Co | Under Armour vs. Columbia Sportswear | Under Armour vs. Hanesbrands | Under Armour vs. PVH Corp |
| Procter Gamble vs. Highway Holdings Limited | Procter Gamble vs. QCR Holdings | Procter Gamble vs. Partner Communications | Procter Gamble vs. Acumen Pharmaceuticals |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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