Correlation Between Interpublic Group and Endeavor Group

Can any of the company-specific risk be diversified away by investing in both Interpublic Group and Endeavor Group 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 Endeavor Group 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 Endeavor Group Holdings, you can compare the effects of market volatilities on Interpublic Group and Endeavor Group 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 Endeavor Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interpublic Group and Endeavor Group.

Diversification Opportunities for Interpublic Group and Endeavor Group

0.26

Correlation Coefficient

Interpublic Group  Endeavor Group

Modest diversification

The 3 months correlation between Interpublic and Endeavor is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Endeavor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavor Group Holdings 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 Endeavor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavor Group Holdings has no effect on the direction of Interpublic Group i.e., Interpublic Group and Endeavor Group go up and down completely randomly.

Pair Corralation between Interpublic Group and Endeavor Group

Considering the 90-day investment horizon Interpublic Group of is expected to generate 0.5 times more return on investment than Endeavor Group. However, Interpublic Group of is 2.0 times less risky than Endeavor Group. It trades about -0.04 of its potential returns per unit of risk. Endeavor Group Holdings is currently generating about -0.02 per unit of risk. If you would invest  2,746  in Interpublic Group of on December 30, 2024 and sell it today you would lose (117.00) from holding Interpublic Group of or give up 4.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

Interpublic Group of  vs.  Endeavor Group Holdings

Interpublic Group

Risk-Adjusted Performance

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 nearly stable basic indicators, Interpublic Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Endeavor Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Endeavor Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Endeavor Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Interpublic Group and Endeavor Group

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

The idea behind Interpublic Group of and Endeavor Group Holdings 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.