Correlation Between Procter Gamble and DANAHER

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

By analyzing existing cross correlation between Procter Gamble and DANAHER P 4375, you can compare the effects of market volatilities on Procter Gamble and DANAHER 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 DANAHER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and DANAHER.

Diversification Opportunities for Procter Gamble and DANAHER

-0.1

Correlation Coefficient

Procter Gamble  DANAHER

Good diversification

The 3 months correlation between Procter and DANAHER is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and DANAHER P 4375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DANAHER P 4375 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 are associated (or correlated) with DANAHER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DANAHER P 4375 has no effect on the direction of Procter Gamble i.e., Procter Gamble and DANAHER go up and down completely randomly.

Pair Corralation between Procter Gamble and DANAHER

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.02 times more return on investment than DANAHER. However, Procter Gamble is 1.02 times more volatile than DANAHER P 4375. It trades about 0.0 of its potential returns per unit of risk. DANAHER P 4375 is currently generating about -0.02 per unit of risk. If you would invest  16,709  in Procter Gamble on December 23, 2024 and sell it today you would lose (40.00) from holding Procter Gamble or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.1%
Values	Daily Returns

Procter Gamble  vs.  DANAHER P 4375

Procter Gamble

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

DANAHER P 4375

Risk-Adjusted Performance

Very Weak

Over the last 90 days DANAHER P 4375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DANAHER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Procter Gamble and DANAHER

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

The idea behind Procter Gamble and DANAHER P 4375 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.