Correlation Between Procter Gamble and Banco Latinoamericano

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

Diversification Opportunities for Procter Gamble and Banco Latinoamericano

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Procter and Banco is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Banco Latinoamericano DE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Latinoamericano 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 Banco Latinoamericano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Latinoamericano has no effect on the direction of Procter Gamble i.e., Procter Gamble and Banco Latinoamericano go up and down completely randomly.

Pair Corralation between Procter Gamble and Banco Latinoamericano

Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the Banco Latinoamericano. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble is 1.35 times less risky than Banco Latinoamericano. The stock trades about -0.01 of its potential returns per unit of risk. The Banco Latinoamericano DE is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,237  in Banco Latinoamericano DE on July 5, 2022 and sell it today you would earn a total of  69.00  from holding Banco Latinoamericano DE or generate 5.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  Banco Latinoamericano DE

 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

Banco Latinoamericano 
Banco Performance
0 of 100
Over the last 90 days Banco Latinoamericano DE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Banco Latinoamericano is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Banco Price Channel

Procter Gamble and Banco Latinoamericano Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and Banco Latinoamericano

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

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