Correlation Between Interpublic Group and Ambari Brands

Can any of the company-specific risk be diversified away by investing in both Interpublic Group and Ambari Brands 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 Interpublic Group and Ambari Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Interpublic Group of and Ambari Brands, you can compare the effects of market volatilities on Interpublic Group and Ambari Brands 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 Interpublic Group with a short position of Ambari Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interpublic Group and Ambari Brands.

Diversification Opportunities for Interpublic Group and Ambari Brands

0.07

Correlation Coefficient

Interpublic Group  Ambari Brands

Significant diversification

The 3 months correlation between Interpublic and Ambari is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Ambari Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambari Brands and Interpublic Group 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 Interpublic Group of are associated (or correlated) with Ambari Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambari Brands has no effect on the direction of Interpublic Group i.e., Interpublic Group and Ambari Brands go up and down completely randomly.

Pair Corralation between Interpublic Group and Ambari Brands

If you would invest  7.50  in Ambari Brands on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Ambari Brands or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Interpublic Group of  vs.  Ambari Brands

Interpublic Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interpublic Group of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Ambari Brands

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Ambari Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile fundamental drivers, Ambari Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Interpublic Group and Ambari Brands

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

The idea behind Interpublic Group of and Ambari Brands 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.