Correlation Between WPP PLC and Dentsu
Can any of the company-specific risk be diversified away by investing in both WPP PLC and Dentsu 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 WPP PLC and Dentsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPP PLC and Dentsu Group, you can compare the effects of market volatilities on WPP PLC and Dentsu 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 WPP PLC with a short position of Dentsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and Dentsu.
Diversification Opportunities for WPP PLC and Dentsu
Excellent diversification
The 3 months correlation between WPP and Dentsu is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC and Dentsu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsu Group and WPP PLC 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 WPP PLC are associated (or correlated) with Dentsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsu Group has no effect on the direction of WPP PLC i.e., WPP PLC and Dentsu go up and down completely randomly.
Pair Corralation between WPP PLC and Dentsu
Assuming the 90 days horizon WPP PLC is expected to generate 0.81 times more return on investment than Dentsu. However, WPP PLC is 1.23 times less risky than Dentsu. It trades about 0.02 of its potential returns per unit of risk. Dentsu Group is currently generating about -0.01 per unit of risk. If you would invest 877.00 in WPP PLC on September 24, 2024 and sell it today you would earn a total of 123.00 from holding WPP PLC or generate 14.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
WPP PLC vs. Dentsu Group
Performance |
Timeline |
WPP PLC |
Dentsu Group |
WPP PLC and Dentsu Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WPP PLC and Dentsu
The main advantage of trading using opposite WPP PLC and Dentsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP PLC position performs unexpectedly, Dentsu 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 Dentsu will offset losses from the drop in Dentsu's long position.WPP PLC vs. Publicis Groupe SA | WPP PLC vs. Omnicom Group | WPP PLC vs. WPP PLC ADR | WPP PLC vs. JCDecaux SA |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |