Correlation Between Procter Gamble and Disney

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

Diversification Opportunities for Procter Gamble and Disney

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Procter and Disney is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Procter Gamble i.e., Procter Gamble and Disney go up and down completely randomly.

Pair Corralation between Procter Gamble and Disney

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.6 times more return on investment than Disney. However, Procter Gamble is 1.67 times less risky than Disney. It trades about -0.38 of its potential returns per unit of risk. Walt Disney is currently generating about -0.39 per unit of risk. If you would invest  13,964  in Procter Gamble on July 3, 2022 and sell it today you would lose (1,339)  from holding Procter Gamble or give up 9.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  Walt Disney

 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

Walt Disney 
Disney Performance
0 of 100
Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. 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 and Disney Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and Disney

The main advantage of trading using opposite Procter Gamble and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.
Procter Gamble vs. Amazon Inc
The idea behind Procter Gamble and Walt Disney 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.
Disney vs. Live Nation Entertainment
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 Stock Screener module to find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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