Correlation Between Procter Gamble and Este Lauder
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Este Lauder 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 Procter Gamble and Este Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Procter Gamble and The Este Lauder, you can compare the effects of market volatilities on Procter Gamble and Este Lauder 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 Procter Gamble with a short position of Este Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Este Lauder.
Diversification Opportunities for Procter Gamble and Este Lauder
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Este is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Este Lauder and Procter Gamble 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 The Procter Gamble are associated (or correlated) with Este Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Este Lauder has no effect on the direction of Procter Gamble i.e., Procter Gamble and Este Lauder go up and down completely randomly.
Pair Corralation between Procter Gamble and Este Lauder
Assuming the 90 days horizon The Procter Gamble is expected to generate 0.31 times more return on investment than Este Lauder. However, The Procter Gamble is 3.26 times less risky than Este Lauder. It trades about 0.04 of its potential returns per unit of risk. The Este Lauder is currently generating about -0.07 per unit of risk. If you would invest 15,498 in The Procter Gamble on September 24, 2024 and sell it today you would earn a total of 722.00 from holding The Procter Gamble or generate 4.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Procter Gamble vs. The Este Lauder
Performance |
Timeline |
Procter Gamble |
Este Lauder |
Procter Gamble and Este Lauder Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Procter Gamble and Este Lauder
The main advantage of trading using opposite Procter Gamble and Este Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Este Lauder 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 Este Lauder will offset losses from the drop in Este Lauder's long position.Procter Gamble vs. LOREAL ADR 15EO | Procter Gamble vs. LOral SA | Procter Gamble vs. LOral SA | Procter Gamble vs. Unilever Plc |
Este Lauder vs. The Procter Gamble | Este Lauder vs. LOREAL ADR 15EO | Este Lauder vs. LOral SA | Este Lauder vs. LOral SA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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