Correlation Between Procter Gamble and 26442UAC8

Can any of the company-specific risk be diversified away by investing in both Procter Gamble and 26442UAC8 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 26442UAC8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Procter Gamble and DUKE ENERGY PROGRESS, you can compare the effects of market volatilities on Procter Gamble and 26442UAC8 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 26442UAC8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and 26442UAC8.

Diversification Opportunities for Procter Gamble and 26442UAC8

0.11

Correlation Coefficient

Procter Gamble  26442UAC8

Average diversification

The 3 months correlation between Procter and 26442UAC8 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and DUKE ENERGY PROGRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY PROGRESS 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 26442UAC8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY PROGRESS has no effect on the direction of Procter Gamble i.e., Procter Gamble and 26442UAC8 go up and down completely randomly.

Pair Corralation between Procter Gamble and 26442UAC8

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 2.55 times less return on investment than 26442UAC8. But when comparing it to its historical volatility, Procter Gamble is 1.68 times less risky than 26442UAC8. It trades about 0.03 of its potential returns per unit of risk. DUKE ENERGY PROGRESS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,675  in DUKE ENERGY PROGRESS on October 22, 2024 and sell it today you would earn a total of  463.00  from holding DUKE ENERGY PROGRESS or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	47.18%
Values	Daily Returns

Procter Gamble  vs.  DUKE ENERGY PROGRESS

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

DUKE ENERGY PROGRESS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY PROGRESS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, 26442UAC8 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Procter Gamble and 26442UAC8

The main advantage of trading using opposite Procter Gamble and 26442UAC8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, 26442UAC8 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 26442UAC8 will offset losses from the drop in 26442UAC8's long position.

The idea behind Procter Gamble and DUKE ENERGY PROGRESS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.