Correlation Between Procter Gamble and Highland Merger
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Highland Merger 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 Highland Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Highland Merger Arbitrage, you can compare the effects of market volatilities on Procter Gamble and Highland Merger 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 Highland Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Highland Merger.
Diversification Opportunities for Procter Gamble and Highland Merger
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Procter and Highland is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Highland Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Merger Arbitrage 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 Highland Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Merger Arbitrage has no effect on the direction of Procter Gamble i.e., Procter Gamble and Highland Merger go up and down completely randomly.
Pair Corralation between Procter Gamble and Highland Merger
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 14.54 times more return on investment than Highland Merger. However, Procter Gamble is 14.54 times more volatile than Highland Merger Arbitrage. It trades about 0.07 of its potential returns per unit of risk. Highland Merger Arbitrage is currently generating about 0.36 per unit of risk. If you would invest 16,450 in Procter Gamble on June 22, 2024 and sell it today you would earn a total of 972.00 from holding Procter Gamble or generate 5.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Procter Gamble vs. Highland Merger Arbitrage
Performance |
Timeline |
Procter Gamble |
Highland Merger Arbitrage |
Procter Gamble and Highland Merger Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Procter Gamble and Highland Merger
The main advantage of trading using opposite Procter Gamble and Highland Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Highland Merger 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 Highland Merger will offset losses from the drop in Highland Merger's long position.Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Church Dwight | Procter Gamble vs. Kimberly Clark |
Highland Merger vs. Commonwealth Global Fund | Highland Merger vs. Tax Managed Large Cap | Highland Merger vs. Acuitas Microcap Fund | Highland Merger vs. Versatile Bond Portfolio |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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