Correlation Between Procter Gamble and INTEL

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

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

Diversification Opportunities for Procter Gamble and INTEL

0.08

Correlation Coefficient

Procter Gamble  INTEL

Significant diversification

The 3 months correlation between Procter and INTEL is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and INTEL PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL PORATION 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 INTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL PORATION has no effect on the direction of Procter Gamble i.e., Procter Gamble and INTEL go up and down completely randomly.

Pair Corralation between Procter Gamble and INTEL

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 5.06 times more return on investment than INTEL. However, Procter Gamble is 5.06 times more volatile than INTEL PORATION. It trades about 0.02 of its potential returns per unit of risk. INTEL PORATION is currently generating about -0.09 per unit of risk. If you would invest  16,663  in Procter Gamble on December 31, 2024 and sell it today you would earn a total of  140.00  from holding Procter Gamble or generate 0.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Procter Gamble  vs.  INTEL PORATION

Procter Gamble

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 1 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

INTEL PORATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTEL PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INTEL 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 INTEL

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

The idea behind Procter Gamble and INTEL PORATION 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.