Correlation Between Procter Gamble and Teucrium Wheat

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

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

Diversification Opportunities for Procter Gamble and Teucrium Wheat

-0.38

Correlation Coefficient

Procter Gamble  Teucrium Wheat

Very good diversification

The 3 months correlation between Procter and Teucrium is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Teucrium Wheat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Wheat 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 Teucrium Wheat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Wheat has no effect on the direction of Procter Gamble i.e., Procter Gamble and Teucrium Wheat go up and down completely randomly.

Pair Corralation between Procter Gamble and Teucrium Wheat

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.57 times more return on investment than Teucrium Wheat. However, Procter Gamble is 1.75 times less risky than Teucrium Wheat. It trades about 0.04 of its potential returns per unit of risk. Teucrium Wheat is currently generating about -0.05 per unit of risk. If you would invest  14,460  in Procter Gamble on September 18, 2024 and sell it today you would earn a total of  2,654  from holding Procter Gamble or generate 18.35% 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.  Teucrium Wheat

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Teucrium Wheat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teucrium Wheat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Procter Gamble and Teucrium Wheat

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

The idea behind Procter Gamble and Teucrium Wheat 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.