Correlation Between Boeing and Procter Gamble

Can any of the company-specific risk be diversified away by investing in both Boeing 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 Boeing and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Boeing and Procter Gamble, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Procter Gamble.

Diversification Opportunities for Boeing and Procter Gamble

-0.28

Correlation Coefficient

Boeing  Procter Gamble

Very good diversification

The 3 months correlation between Boeing and Procter is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Boeing 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 The Boeing 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 Boeing i.e., Boeing and Procter Gamble go up and down completely randomly.

Pair Corralation between Boeing and Procter Gamble

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Procter Gamble. In addition to that, Boeing is 2.36 times more volatile than Procter Gamble. It trades about -0.22 of its total potential returns per unit of risk. Procter Gamble is currently generating about 0.12 per unit of volatility. If you would invest  15,514  in Procter Gamble on January 26, 2024 and sell it today you would earn a total of  746.00  from holding Procter Gamble or generate 4.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Boeing  vs.  Procter Gamble

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Procter Gamble

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boeing and Procter Gamble

The main advantage of trading using opposite Boeing and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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.

The idea behind The Boeing 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.

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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 the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.