Correlation Between Procter Gamble and Herbalife Nutrition
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Herbalife Nutrition 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 Herbalife Nutrition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Herbalife Nutrition, you can compare the effects of market volatilities on Procter Gamble and Herbalife Nutrition 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 Herbalife Nutrition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Herbalife Nutrition.
Diversification Opportunities for Procter Gamble and Herbalife Nutrition
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Herbalife is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Herbalife Nutrition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herbalife Nutrition 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 Herbalife Nutrition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herbalife Nutrition has no effect on the direction of Procter Gamble i.e., Procter Gamble and Herbalife Nutrition go up and down completely randomly.
Pair Corralation between Procter Gamble and Herbalife Nutrition
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.28 times more return on investment than Herbalife Nutrition. However, Procter Gamble is 3.63 times less risky than Herbalife Nutrition. It trades about 0.01 of its potential returns per unit of risk. Herbalife Nutrition is currently generating about -0.04 per unit of risk. If you would invest 15,045 in Procter Gamble on January 20, 2024 and sell it today you would earn a total of 769.00 from holding Procter Gamble or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Herbalife Nutrition
Performance |
| Timeline |
| Procter Gamble |
| Herbalife Nutrition |
Procter Gamble and Herbalife Nutrition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Herbalife Nutrition
The main advantage of trading using opposite Procter Gamble and Herbalife Nutrition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Herbalife Nutrition 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 Herbalife Nutrition will offset losses from the drop in Herbalife Nutrition's long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| Herbalife Nutrition vs. Seneca Foods Corp | Herbalife Nutrition vs. Central Garden Pet | Herbalife Nutrition vs. Central Garden Pet | Herbalife Nutrition vs. Lifeway Foods |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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