Correlation Between CyberAgent and WPP PLC
Can any of the company-specific risk be diversified away by investing in both CyberAgent and WPP PLC 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 CyberAgent and WPP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CyberAgent and WPP PLC, you can compare the effects of market volatilities on CyberAgent and WPP PLC 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 CyberAgent with a short position of WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CyberAgent and WPP PLC.
Diversification Opportunities for CyberAgent and WPP PLC
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CyberAgent and WPP is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CyberAgent and WPP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC and CyberAgent 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 CyberAgent are associated (or correlated) with WPP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP PLC has no effect on the direction of CyberAgent i.e., CyberAgent and WPP PLC go up and down completely randomly.
Pair Corralation between CyberAgent and WPP PLC
Assuming the 90 days horizon CyberAgent is expected to under-perform the WPP PLC. In addition to that, CyberAgent is 1.5 times more volatile than WPP PLC. It trades about 0.0 of its total potential returns per unit of risk. WPP PLC is currently generating about 0.02 per unit of volatility. 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 Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CyberAgent vs. WPP PLC
Performance |
Timeline |
CyberAgent |
WPP PLC |
CyberAgent and WPP PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CyberAgent and WPP PLC
The main advantage of trading using opposite CyberAgent and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CyberAgent position performs unexpectedly, WPP PLC 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 WPP PLC will offset losses from the drop in WPP PLC's long position.CyberAgent vs. Publicis Groupe SA | CyberAgent vs. Omnicom Group | CyberAgent vs. WPP PLC | CyberAgent vs. WPP PLC ADR |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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