Correlation Between Procter Gamble and JPMorgan USD

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

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

Diversification Opportunities for Procter Gamble and JPMorgan USD

0.58

Correlation Coefficient

Procter Gamble  JPMorgan USD

Very weak diversification

The 3 months correlation between Procter and JPMorgan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and JPMorgan USD Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan USD Emerging 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 JPMorgan USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan USD Emerging has no effect on the direction of Procter Gamble i.e., Procter Gamble and JPMorgan USD go up and down completely randomly.

Pair Corralation between Procter Gamble and JPMorgan USD

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.5 times more return on investment than JPMorgan USD. However, Procter Gamble is 1.5 times more volatile than JPMorgan USD Emerging. It trades about 0.03 of its potential returns per unit of risk. JPMorgan USD Emerging is currently generating about 0.02 per unit of risk. If you would invest  14,048  in Procter Gamble on January 20, 2024 and sell it today you would earn a total of  1,681  from holding Procter Gamble or generate 11.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Procter Gamble  vs.  JPMorgan USD Emerging

Procter Gamble

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in May 2024.

JPMorgan USD Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan USD Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, JPMorgan USD is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Procter Gamble and JPMorgan USD

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

The idea behind Procter Gamble and JPMorgan USD Emerging 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.