Correlation Between PRXNA and Procter Gamble

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

By analyzing existing cross correlation between PRXNA 4027 03 AUG 50 and Procter Gamble, you can compare the effects of market volatilities on PRXNA and Procter Gamble 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 PRXNA with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRXNA and Procter Gamble.

Diversification Opportunities for PRXNA and Procter Gamble

-0.09

Correlation Coefficient

PRXNA  Procter Gamble

Good diversification

The 3 months correlation between PRXNA and Procter is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding PRXNA 4027 03 AUG 50 and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and PRXNA 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 PRXNA 4027 03 AUG 50 are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of PRXNA i.e., PRXNA and Procter Gamble go up and down completely randomly.

Pair Corralation between PRXNA and Procter Gamble

Assuming the 90 days trading horizon PRXNA 4027 03 AUG 50 is expected to under-perform the Procter Gamble. In addition to that, PRXNA is 2.89 times more volatile than Procter Gamble. It trades about -0.19 of its total potential returns per unit of risk. Procter Gamble is currently generating about -0.04 per unit of volatility. If you would invest  17,817  in Procter Gamble on November 29, 2024 and sell it today you would lose (615.00) from holding Procter Gamble or give up 3.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.0%
Values	Daily Returns

PRXNA 4027 03 AUG 50  vs.  Procter Gamble

PRXNA 4027 03

Risk-Adjusted Performance

Very Weak

Over the last 90 days PRXNA 4027 03 AUG 50 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for PRXNA 4027 03 AUG 50 investors.

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.

Pair Trading with PRXNA and Procter Gamble

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

The idea behind PRXNA 4027 03 AUG 50 and Procter Gamble 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.