Correlation Between Procter Gamble and Exxon

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

Diversification Opportunities for Procter Gamble and Exxon

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between Procter and Exxon is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Procter Gamble i.e., Procter Gamble and Exxon go up and down completely randomly.

Pair Corralation between Procter Gamble and Exxon

Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the Exxon. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble is 1.9 times less risky than Exxon. The stock trades about 0.0 of its potential returns per unit of risk. The Exxon Mobil Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,208  in Exxon Mobil Corp on June 30, 2022 and sell it today you would earn a total of  5,366  from holding Exxon Mobil Corp or generate 167.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  Exxon Mobil Corp

 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 latest weak 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

Exxon Mobil Corp 
Exxon Performance
0 of 100
Over the last 90 days Exxon Mobil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Exxon is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Exxon Price Channel

Procter Gamble and Exxon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and Exxon

The main advantage of trading using opposite Procter Gamble and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.
Procter Gamble vs. Kibush Capital Corp
The idea behind Procter Gamble and Exxon Mobil Corp 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.
Exxon 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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