Correlation Between Interpublic Group and Liberty Latin

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

Diversification Opportunities for Interpublic Group and Liberty Latin

0.5

Correlation Coefficient

Interpublic Group  Liberty Latin

Very weak diversification

The 3 months correlation between Interpublic and Liberty is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Liberty Latin America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Latin America 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 Liberty Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Latin America has no effect on the direction of Interpublic Group i.e., Interpublic Group and Liberty Latin go up and down completely randomly.

Pair Corralation between Interpublic Group and Liberty Latin

Considering the 90-day investment horizon Interpublic Group of is expected to generate 0.45 times more return on investment than Liberty Latin. However, Interpublic Group of is 2.22 times less risky than Liberty Latin. It trades about -0.05 of its potential returns per unit of risk. Liberty Latin America is currently generating about -0.11 per unit of risk. If you would invest  3,227  in Interpublic Group of on August 30, 2024 and sell it today you would lose (179.00) from holding Interpublic Group of or give up 5.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Interpublic Group of  vs.  Liberty Latin America

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

Liberty Latin America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Latin America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Interpublic Group and Liberty Latin

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

The idea behind Interpublic Group of and Liberty Latin America 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.