Correlation Between Shift4 Payments and Procter Gamble

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Can any of the company-specific risk be diversified away by investing in both Shift4 Payments 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 Shift4 Payments and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shift4 Payments and Procter Gamble, you can compare the effects of market volatilities on Shift4 Payments 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 Shift4 Payments with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shift4 Payments and Procter Gamble.

Diversification Opportunities for Shift4 Payments and Procter Gamble

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Shift4 and Procter is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Shift4 Payments and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Shift4 Payments 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 Shift4 Payments 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 Shift4 Payments i.e., Shift4 Payments and Procter Gamble go up and down completely randomly.

Pair Corralation between Shift4 Payments and Procter Gamble

Given the investment horizon of 90 days Shift4 Payments is expected to under-perform the Procter Gamble. In addition to that, Shift4 Payments is 2.68 times more volatile than Procter Gamble. It trades about -0.14 of its total potential returns per unit of risk. Procter Gamble is currently generating about -0.2 per unit of volatility. If you would invest  14,169  in Procter Gamble on June 29, 2022 and sell it today you would lose (631.00)  from holding Procter Gamble or give up 4.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Shift4 Payments  vs.  Procter Gamble

 Performance (%) 
       Timeline  
Shift4 Payments 
Shift4 Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Shift4 Payments are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, Shift4 Payments reported solid returns over the last few months and may actually be approaching a breakup point.

Shift4 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 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

Shift4 Payments and Procter Gamble Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shift4 Payments and Procter Gamble

The main advantage of trading using opposite Shift4 Payments and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shift4 Payments 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.
Shift4 Payments vs. Apple Inc
Shift4 Payments vs. Kibush Capital Corp
The idea behind Shift4 Payments 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. Kibush Capital Corp
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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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