Correlation Between Procter Gamble and Dupont Denemours

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

Diversification Opportunities for Procter Gamble and Dupont Denemours

0.64
  Correlation Coefficient

Poor diversification

The 1 month correlation between Procter and Dupont is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Dupont Denemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dupont Denemours 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 Dupont Denemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dupont Denemours has no effect on the direction of Procter Gamble i.e., Procter Gamble and Dupont Denemours go up and down completely randomly.

Pair Corralation between Procter Gamble and Dupont Denemours

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.69 times more return on investment than Dupont Denemours. However, Procter Gamble is 1.44 times less risky than Dupont Denemours. It trades about -0.07 of its potential returns per unit of risk. Dupont Denemours is currently generating about -0.07 per unit of risk. If you would invest  15,494  in Procter Gamble on July 9, 2022 and sell it today you would lose (2,998)  from holding Procter Gamble or give up 19.35% of portfolio value over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  Dupont Denemours

 Performance (%) 
       Timeline  
Procter Gamble 
Procter Performance
0 of 100
Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Procter Price Channel

Dupont Denemours 
Dupont Performance
0 of 100
Over the last 90 days Dupont Denemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Dupont Price Channel

Procter Gamble and Dupont Denemours Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and Dupont Denemours

The main advantage of trading using opposite Procter Gamble and Dupont Denemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Dupont Denemours 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 Dupont Denemours will offset losses from the drop in Dupont Denemours' long position.
Procter Gamble vs. Amazon Inc
The idea behind Procter Gamble and Dupont Denemours 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.
Dupont Denemours vs. Amazon Inc
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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