Correlation Between Disney and Procter Gamble

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

Diversification Opportunities for Disney and Procter Gamble

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Disney and Procter is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Disney 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 Walt Disney are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Disney i.e., Disney and Procter Gamble go up and down completely randomly.

Pair Corralation between Disney and Procter Gamble

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Procter Gamble. In addition to that, Disney is 1.72 times more volatile than Procter Gamble. It trades about -0.01 of its total potential returns per unit of risk. Procter Gamble is currently generating about -0.01 per unit of volatility. If you would invest  13,932  in Procter Gamble on July 8, 2022 and sell it today you would lose (1,262)  from holding Procter Gamble or give up 9.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Walt Disney  vs.  Procter Gamble

 Performance (%) 
       Timeline  
Walt Disney 
Disney Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Disney is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Disney Price Channel

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 latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Procter Price Channel

Disney and Procter Gamble Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Procter Gamble

The main advantage of trading using opposite Disney and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.
Disney vs. Live Nation Entertainment
The idea behind Walt Disney and Procter Gamble 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.
Procter Gamble 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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