Correlation Between Procter Gamble and TRUIST

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

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

Diversification Opportunities for Procter Gamble and TRUIST

-0.24

Correlation Coefficient

Procter Gamble  TRUIST

Very good diversification

The 3 months correlation between Procter and TRUIST is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and TRUIST FINANCIAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRUIST FINANCIAL 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 TRUIST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRUIST FINANCIAL P has no effect on the direction of Procter Gamble i.e., Procter Gamble and TRUIST go up and down completely randomly.

Pair Corralation between Procter Gamble and TRUIST

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.25 times more return on investment than TRUIST. However, Procter Gamble is 1.25 times more volatile than TRUIST FINANCIAL P. It trades about -0.04 of its potential returns per unit of risk. TRUIST FINANCIAL P is currently generating about -0.11 per unit of risk. If you would invest  17,817  in Procter Gamble on November 28, 2024 and sell it today you would lose (552.00) from holding Procter Gamble or give up 3.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Procter Gamble  vs.  TRUIST FINANCIAL P

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.

TRUIST FINANCIAL P

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRUIST FINANCIAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for TRUIST FINANCIAL P investors.

Pair Trading with Procter Gamble and TRUIST

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

The idea behind Procter Gamble and TRUIST FINANCIAL 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.