Correlation Between Procter Gamble and Jpmorgan Small

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Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Jpmorgan Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Procter Gamble and Jpmorgan Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Jpmorgan Small.

Diversification Opportunities for Procter Gamble and Jpmorgan Small

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Procter and Jpmorgan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and JPMORGAN SMALL CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Small Cap has no effect on the direction of Procter Gamble i.e., Procter Gamble and Jpmorgan Small go up and down completely randomly.

Pair Corralation between Procter Gamble and Jpmorgan Small

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.33 times less return on investment than Jpmorgan Small. But when comparing it to its historical volatility, Procter Gamble is 1.54 times less risky than Jpmorgan Small. It trades about 0.2 of its potential returns per unit of risk. Jpmorgan Small Cap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,258  in Jpmorgan Small Cap on December 29, 2023 and sell it today you would earn a total of  117.00  from holding Jpmorgan Small Cap or generate 2.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  JPMORGAN SMALL CAP

 Performance 
       Timeline  
Procter Gamble 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 17 (%) 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 April 2024.
Jpmorgan Small Cap 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Small Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Procter Gamble and Jpmorgan Small Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and Jpmorgan Small

The main advantage of trading using opposite Procter Gamble and Jpmorgan Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Jpmorgan Small 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 Small will offset losses from the drop in Jpmorgan Small's long position.
The idea behind Procter Gamble and Jpmorgan Small Cap 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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