Correlation Between Procter Gamble and Walt Disney

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

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

Diversification Opportunities for Procter Gamble and Walt Disney

0.49

Correlation Coefficient

Procter Gamble  Walt Disney

Very weak diversification

The 3 months correlation between Procter and Walt is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 The Procter Gamble are associated (or correlated) with Walt Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Procter Gamble i.e., Procter Gamble and Walt Disney go up and down completely randomly.

Pair Corralation between Procter Gamble and Walt Disney

Assuming the 90 days trading horizon The Procter Gamble is expected to generate 1.09 times more return on investment than Walt Disney. However, Procter Gamble is 1.09 times more volatile than The Walt Disney. It trades about -0.06 of its potential returns per unit of risk. The Walt Disney is currently generating about -0.11 per unit of risk. If you would invest  7,867  in The Procter Gamble on December 1, 2024 and sell it today you would lose (567.00) from holding The Procter Gamble or give up 7.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.08%
Values	Daily Returns

The Procter Gamble  vs.  The Walt Disney

Procter Gamble

Risk-Adjusted Performance

Very Weak

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

Walt Disney

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Procter Gamble and Walt Disney

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

The idea behind The Procter Gamble and The Walt Disney 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.