Correlation Between Clear Channel and Publicis Groupe

Can any of the company-specific risk be diversified away by investing in both Clear Channel and Publicis Groupe 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 Clear Channel and Publicis Groupe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clear Channel Outdoor and Publicis Groupe SA, you can compare the effects of market volatilities on Clear Channel and Publicis Groupe 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 Clear Channel with a short position of Publicis Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clear Channel and Publicis Groupe.

Diversification Opportunities for Clear Channel and Publicis Groupe

-0.31

Correlation Coefficient

Clear Channel  Publicis Groupe

Very good diversification

The 3 months correlation between Clear and Publicis is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Clear Channel Outdoor and Publicis Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Publicis Groupe SA and Clear Channel 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 Clear Channel Outdoor are associated (or correlated) with Publicis Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Publicis Groupe SA has no effect on the direction of Clear Channel i.e., Clear Channel and Publicis Groupe go up and down completely randomly.

Pair Corralation between Clear Channel and Publicis Groupe

Considering the 90-day investment horizon Clear Channel is expected to generate 5.5 times less return on investment than Publicis Groupe. In addition to that, Clear Channel is 2.17 times more volatile than Publicis Groupe SA. It trades about 0.01 of its total potential returns per unit of risk. Publicis Groupe SA is currently generating about 0.06 per unit of volatility. If you would invest  1,766  in Publicis Groupe SA on October 23, 2024 and sell it today you would earn a total of  215.00  from holding Publicis Groupe SA or generate 12.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	24.09%
Values	Daily Returns

Clear Channel Outdoor  vs.  Publicis Groupe SA

Clear Channel Outdoor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Channel Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Clear Channel is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Publicis Groupe SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Publicis Groupe SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Publicis Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Clear Channel and Publicis Groupe

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

The idea behind Clear Channel Outdoor and Publicis Groupe SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.