Correlation Between Fundos De and Procter Gamble

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

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

Diversification Opportunities for Fundos De and Procter Gamble

0.69

Correlation Coefficient

Fundos De  Procter Gamble

Poor diversification

The 3 months correlation between Fundos and Procter is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fundos de Investimento and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Fundos De 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 Fundos de Investimento 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 Fundos De i.e., Fundos De and Procter Gamble go up and down completely randomly.

Pair Corralation between Fundos De and Procter Gamble

Assuming the 90 days trading horizon Fundos de Investimento is expected to generate 0.24 times more return on investment than Procter Gamble. However, Fundos de Investimento is 4.14 times less risky than Procter Gamble. It trades about -0.25 of its potential returns per unit of risk. The Procter Gamble is currently generating about -0.07 per unit of risk. If you would invest  5,099  in Fundos de Investimento on October 6, 2024 and sell it today you would lose (102.00) from holding Fundos de Investimento or give up 2.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.89%
Values	Daily Returns

Fundos de Investimento  vs.  The Procter Gamble

Fundos de Investimento

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Fundos de Investimento has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat weak basic indicators, Fundos De sustained solid returns over the last few months and may actually be approaching a breakup point.

Procter Gamble

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Procter Gamble are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Procter Gamble sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fundos De and Procter Gamble

The main advantage of trading using opposite Fundos De and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundos De 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 Fundos de Investimento and The 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.