Correlation Between Procter Gamble and Alpha Architect

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

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

Diversification Opportunities for Procter Gamble and Alpha Architect

-0.48

Correlation Coefficient

Procter Gamble  Alpha Architect

Very good diversification

The 3 months correlation between Procter and Alpha is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Alpha Architect Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect Aggregate 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 Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect Aggregate has no effect on the direction of Procter Gamble i.e., Procter Gamble and Alpha Architect go up and down completely randomly.

Pair Corralation between Procter Gamble and Alpha Architect

Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the Alpha Architect. In addition to that, Procter Gamble is 3.42 times more volatile than Alpha Architect Aggregate. It trades about -0.07 of its total potential returns per unit of risk. Alpha Architect Aggregate is currently generating about 0.1 per unit of volatility. If you would invest  10,176  in Alpha Architect Aggregate on May 4, 2025 and sell it today you would earn a total of  183.00  from holding Alpha Architect Aggregate or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Procter Gamble  vs.  Alpha Architect Aggregate

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.

Alpha Architect Aggregate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Architect Aggregate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alpha Architect is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Procter Gamble and Alpha Architect

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

The idea behind Procter Gamble and Alpha Architect Aggregate 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.