Correlation Between Procter Gamble and REAL ESTATE

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

Diversification Opportunities for Procter Gamble and REAL ESTATE

0.75
  Correlation Coefficient

Poor diversification

The 24 months correlation between Procter and ARREX is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and REAL ESTATE FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REAL ESTATE FUND 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 REAL ESTATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REAL ESTATE FUND has no effect on the direction of Procter Gamble i.e., Procter Gamble and REAL ESTATE go up and down completely randomly.

Pair Corralation between Procter Gamble and REAL ESTATE

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.9 times more return on investment than REAL ESTATE. However, Procter Gamble is 1.11 times less risky than REAL ESTATE. It trades about 0.01 of its potential returns per unit of risk. REAL ESTATE FUND is currently generating about -0.04 per unit of risk. If you would invest  14,874  in Procter Gamble on September 4, 2022 and sell it today you would earn a total of  187.00  from holding Procter Gamble or generate 1.26% return on investment over 90 days.
Time Period24 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  REAL ESTATE FUND

 Performance (%) 
       Timeline  
Procter Gamble 
Procter Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Procter Price Channel

REAL ESTATE FUND 
ARREX Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in REAL ESTATE FUND are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, REAL ESTATE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ARREX Price Channel

Procter Gamble and REAL ESTATE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and REAL ESTATE

The main advantage of trading using opposite Procter Gamble and REAL ESTATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, REAL ESTATE 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 REAL ESTATE will offset losses from the drop in REAL ESTATE's long position.
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The idea behind Procter Gamble and REAL ESTATE FUND 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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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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