Correlation Between Procter Gamble and Crumbs Bake

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

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

Diversification Opportunities for Procter Gamble and Crumbs Bake

0.0

Correlation Coefficient

Procter Gamble  Crumbs Bake

Pay attention - limited upside

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

Pair Corralation between Procter Gamble and Crumbs Bake

If you would invest  13,746  in Procter Gamble on January 25, 2024 and sell it today you would earn a total of  2,514  from holding Procter Gamble or generate 18.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	33.41%
Values	Daily Returns

Procter Gamble  vs.  Crumbs Bake Shop

Procter Gamble

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 8 (%) 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.

Crumbs Bake Shop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crumbs Bake Shop has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Crumbs Bake is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Procter Gamble and Crumbs Bake

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

The idea behind Procter Gamble and Crumbs Bake Shop 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.