Correlation Between Procter Gamble and Apple

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

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

Diversification Opportunities for Procter Gamble and Apple

0.09

Correlation Coefficient

Procter Gamble  Apple

Significant diversification

The 3 months correlation between Procter and Apple is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble DRC and Apple Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc DRC 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 Procter Gamble DRC are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc DRC has no effect on the direction of Procter Gamble i.e., Procter Gamble and Apple go up and down completely randomly.

Pair Corralation between Procter Gamble and Apple

Assuming the 90 days horizon Procter Gamble DRC is expected to generate 0.74 times more return on investment than Apple. However, Procter Gamble DRC is 1.34 times less risky than Apple. It trades about 0.12 of its potential returns per unit of risk. Apple Inc DRC is currently generating about -0.03 per unit of risk. If you would invest  1,327,493  in Procter Gamble DRC on December 29, 2024 and sell it today you would earn a total of  135,007  from holding Procter Gamble DRC or generate 10.17% return on investment over 90 days.

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

Procter Gamble DRC  vs.  Apple Inc DRC

Procter Gamble DRC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble DRC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Apple Inc DRC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Procter Gamble and Apple

The main advantage of trading using opposite Procter Gamble and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.

The idea behind Procter Gamble DRC and Apple Inc DRC 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.