Correlation Between Kenvue and Procter Gamble

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

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

Diversification Opportunities for Kenvue and Procter Gamble

0.6

Correlation Coefficient

Kenvue  Procter Gamble

Poor diversification

The 3 months correlation between Kenvue and Procter is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kenvue Inc and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Kenvue 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 Kenvue Inc 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 Kenvue i.e., Kenvue and Procter Gamble go up and down completely randomly.

Pair Corralation between Kenvue and Procter Gamble

Given the investment horizon of 90 days Kenvue Inc is expected to generate 1.11 times more return on investment than Procter Gamble. However, Kenvue is 1.11 times more volatile than Procter Gamble. It trades about 0.14 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.03 per unit of risk. If you would invest  2,097  in Kenvue Inc on December 29, 2024 and sell it today you would earn a total of  253.00  from holding Kenvue Inc or generate 12.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Kenvue Inc  vs.  Procter Gamble

Kenvue Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kenvue Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Kenvue may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Procter Gamble

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Kenvue and Procter Gamble

The main advantage of trading using opposite Kenvue and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenvue 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 Kenvue Inc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.