Correlation Between Procter Gamble and WisdomTree China

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Can any of the company-specific risk be diversified away by investing in both Procter Gamble and WisdomTree China 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 WisdomTree China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and WisdomTree China ex State Owned, you can compare the effects of market volatilities on Procter Gamble and WisdomTree China 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 WisdomTree China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and WisdomTree China.

Diversification Opportunities for Procter Gamble and WisdomTree China

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Procter and WisdomTree is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and WisdomTree China ex State Owne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree China 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 WisdomTree China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree China has no effect on the direction of Procter Gamble i.e., Procter Gamble and WisdomTree China go up and down completely randomly.

Pair Corralation between Procter Gamble and WisdomTree China

Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the WisdomTree China. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble is 1.2 times less risky than WisdomTree China. The stock trades about -0.07 of its potential returns per unit of risk. The WisdomTree China ex State Owned is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,315  in WisdomTree China ex State Owned on May 4, 2025 and sell it today you would earn a total of  330.00  from holding WisdomTree China ex State Owned or generate 9.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  WisdomTree China ex State Owne

 Performance 
       Timeline  
Procter Gamble 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.
WisdomTree China 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree China ex State Owned are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, WisdomTree China may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Procter Gamble and WisdomTree China Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and WisdomTree China

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

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