Correlation Between Procter Gamble and Vishay Precision

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

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

Diversification Opportunities for Procter Gamble and Vishay Precision

0.08

Correlation Coefficient

Procter Gamble  Vishay Precision

Significant diversification

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

Pair Corralation between Procter Gamble and Vishay Precision

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.46 times more return on investment than Vishay Precision. However, Procter Gamble is 2.15 times less risky than Vishay Precision. It trades about 0.04 of its potential returns per unit of risk. Vishay Precision Group is currently generating about -0.04 per unit of risk. If you would invest  14,520  in Procter Gamble on September 19, 2024 and sell it today you would earn a total of  2,388  from holding Procter Gamble or generate 16.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Procter Gamble  vs.  Vishay Precision Group

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

Vishay Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vishay Precision Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vishay Precision is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Procter Gamble and Vishay Precision

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

The idea behind Procter Gamble and Vishay Precision Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.