Correlation Between Procter Gamble and Village Bank

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

By analyzing existing cross correlation between Procter Gamble Health and Village Bank and, you can compare the effects of market volatilities on Procter Gamble and Village Bank 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 Village Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Village Bank.

Diversification Opportunities for Procter Gamble and Village Bank

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Correlation Coefficient

Procter Gamble  Village Bank

Pay attention - limited upside

The 3 months correlation between Procter and Village is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble Health and Village Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Bank 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 Health are associated (or correlated) with Village Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Bank has no effect on the direction of Procter Gamble i.e., Procter Gamble and Village Bank go up and down completely randomly.

Pair Corralation between Procter Gamble and Village Bank

If you would invest  4,231  in Village Bank and on January 26, 2024 and sell it today you would earn a total of  4.00  from holding Village Bank and or generate 0.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Procter Gamble Health  vs.  Village Bank and

Procter Gamble Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Procter Gamble is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Village Bank

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Village Bank and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Village Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Procter Gamble and Village Bank

The main advantage of trading using opposite Procter Gamble and Village Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Village Bank 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 Village Bank will offset losses from the drop in Village Bank's long position.

The idea behind Procter Gamble Health and Village Bank and 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.