Correlation Between 655844CE6 and Procter Gamble

Can any of the company-specific risk be diversified away by investing in both 655844CE6 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 655844CE6 and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US655844CE60 and Procter Gamble, you can compare the effects of market volatilities on 655844CE6 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 655844CE6 with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of 655844CE6 and Procter Gamble.

Diversification Opportunities for 655844CE6 and Procter Gamble

-0.04

Correlation Coefficient

655844CE6  Procter Gamble

Good diversification

The 3 months correlation between 655844CE6 and Procter is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding US655844CE60 and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and 655844CE6 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 US655844CE60 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 655844CE6 i.e., 655844CE6 and Procter Gamble go up and down completely randomly.

Pair Corralation between 655844CE6 and Procter Gamble

Assuming the 90 days trading horizon US655844CE60 is expected to under-perform the Procter Gamble. But the bond apears to be less risky and, when comparing its historical volatility, US655844CE60 is 1.76 times less risky than Procter Gamble. The bond trades about -0.06 of its potential returns per unit of risk. The Procter Gamble is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  17,219  in Procter Gamble on September 28, 2024 and sell it today you would lose (203.00) from holding Procter Gamble or give up 1.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.71%
Values	Daily Returns

US655844CE60  vs.  Procter Gamble

US655844CE60

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US655844CE60 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 655844CE6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with 655844CE6 and Procter Gamble

The main advantage of trading using opposite 655844CE6 and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 655844CE6 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.

The idea behind US655844CE60 and Procter Gamble pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.