Correlation Between Procter Gamble and Apple

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

Diversification Opportunities for Procter Gamble and Apple

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Procter and Apple is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Procter Gamble i.e., Procter Gamble and Apple go up and down completely randomly.

Pair Corralation between Procter Gamble and Apple

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 2.02 times less return on investment than Apple. In addition to that, Procter Gamble is 1.13 times more volatile than Apple Inc. It trades about 0.17 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.39 per unit of volatility. If you would invest  15,283  in Apple Inc on May 21, 2022 and sell it today you would earn a total of  2,132  from holding Apple Inc or generate 13.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  Apple Inc

 Performance (%) 
       Timeline  
Procter Gamble 
Procter Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 3 (%) 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

Apple Inc 
Apple Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Apple revealed solid returns over the last few months and may actually be approaching a breakup point.

Apple Price Channel

Procter Gamble and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and Apple

The main advantage of trading using opposite Procter Gamble and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
The idea behind Procter Gamble and Apple Inc 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.
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 Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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