Correlation Between Procter Gamble and STATE

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

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

Diversification Opportunities for Procter Gamble and STATE

-0.37

Correlation Coefficient

Procter Gamble  STATE

Very good diversification

The 3 months correlation between Procter and STATE is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and STATE STR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STATE STR P 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 STATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STATE STR P has no effect on the direction of Procter Gamble i.e., Procter Gamble and STATE go up and down completely randomly.

Pair Corralation between Procter Gamble and STATE

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 3.64 times more return on investment than STATE. However, Procter Gamble is 3.64 times more volatile than STATE STR P. It trades about 0.09 of its potential returns per unit of risk. STATE STR P is currently generating about -0.11 per unit of risk. If you would invest  17,054  in Procter Gamble on August 30, 2024 and sell it today you would earn a total of  882.00  from holding Procter Gamble or generate 5.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

Procter Gamble  vs.  STATE STR P

Procter Gamble

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 6 (%) 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.

STATE STR P

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Procter Gamble and STATE STR P 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.