Correlation Between Procter Gamble and Boeing
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Boeing 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 Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and The Boeing, you can compare the effects of market volatilities on Procter Gamble and Boeing 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 Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Boeing.
Diversification Opportunities for Procter Gamble and Boeing
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Boeing is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Procter Gamble i.e., Procter Gamble and Boeing go up and down completely randomly.
Pair Corralation between Procter Gamble and Boeing
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.7 times more return on investment than Boeing. However, Procter Gamble is 1.43 times less risky than Boeing. It trades about 0.11 of its potential returns per unit of risk. The Boeing is currently generating about -0.54 per unit of risk. If you would invest 15,916 in Procter Gamble on January 25, 2024 and sell it today you would earn a total of 344.00 from holding Procter Gamble or generate 2.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Procter Gamble vs. The Boeing
Performance |
Timeline |
Procter Gamble |
Boeing |
Procter Gamble and Boeing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Procter Gamble and Boeing
The main advantage of trading using opposite Procter Gamble and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Honest Company | Procter Gamble vs. Hims Hers Health | Procter Gamble vs. European Wax Center |
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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 the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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