Correlation Between Interpublic Group and Magnite

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

Diversification Opportunities for Interpublic Group and Magnite

-0.41

Correlation Coefficient

Interpublic Group  Magnite

Very good diversification

The 3 months correlation between Interpublic and Magnite is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite 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 Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Interpublic Group i.e., Interpublic Group and Magnite go up and down completely randomly.

Pair Corralation between Interpublic Group and Magnite

Considering the 90-day investment horizon Interpublic Group of is expected to under-perform the Magnite. But the stock apears to be less risky and, when comparing its historical volatility, Interpublic Group of is 2.03 times less risky than Magnite. The stock trades about -0.06 of its potential returns per unit of risk. The Magnite is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,251  in Magnite on October 23, 2024 and sell it today you would earn a total of  293.00  from holding Magnite or generate 23.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Interpublic Group of  vs.  Magnite

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Magnite

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magnite are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Magnite demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Interpublic Group and Magnite

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

The idea behind Interpublic Group of and Magnite 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.