Correlation Between Procter Gamble and Apple
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Apple Inc, you can compare the effects of market volatilities on Procter Gamble and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Apple.
Diversification Opportunities for Procter Gamble and Apple
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Apple is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Procter Gamble i.e., Procter Gamble and Apple go up and down completely randomly.
Pair Corralation between Procter Gamble and Apple
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.26 times less return on investment than Apple. But when comparing it to its historical volatility, Procter Gamble is 1.4 times less risky than Apple. It trades about 0.01 of its potential returns per unit of risk. Apple Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 16,445 in Apple Inc on January 19, 2024 and sell it today you would earn a total of 360.00 from holding Apple Inc or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Apple Inc
Performance |
| Timeline |
| Procter Gamble |
| Apple Inc |
Procter Gamble and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Apple
The main advantage of trading using opposite Procter Gamble and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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