Correlation Between United States and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Procter Gamble DRC, you can compare the effects of market volatilities on United States 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 United States with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Procter Gamble.
Diversification Opportunities for United States and Procter Gamble
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Procter is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Procter Gamble DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble DRC and United States 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 United States Steel 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 DRC has no effect on the direction of United States i.e., United States and Procter Gamble go up and down completely randomly.
Pair Corralation between United States and Procter Gamble
Given the investment horizon of 90 days United States Steel is expected to generate 2.09 times more return on investment than Procter Gamble. However, United States is 2.09 times more volatile than Procter Gamble DRC. It trades about 0.03 of its potential returns per unit of risk. Procter Gamble DRC is currently generating about 0.04 per unit of risk. If you would invest 68,418 in United States Steel on September 12, 2024 and sell it today you would earn a total of 1,453 from holding United States Steel or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Procter Gamble DRC
Performance |
| Timeline |
| United States Steel |
| Procter Gamble DRC |
United States and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Procter Gamble
The main advantage of trading using opposite United States and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Steel Dynamics | United States vs. Companhia Siderrgica Nacional | United States vs. The Select Sector | United States vs. Promotora y Operadora |
| Procter Gamble vs. DXC Technology | Procter Gamble vs. Samsung Electronics Co | Procter Gamble vs. Verizon Communications | Procter Gamble vs. Grupo Carso SAB |
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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