Correlation Between Kidoz and WPP Plc

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

By analyzing existing cross correlation between Kidoz Inc and WPP plc, you can compare the effects of market volatilities on Kidoz 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 Kidoz with a short position of WPP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kidoz and WPP Plc.

Diversification Opportunities for Kidoz and WPP Plc

-0.03

Correlation Coefficient

Kidoz  WPP Plc

Good diversification

The 3 months correlation between Kidoz and WPP is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kidoz Inc and WPP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP plc and Kidoz 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 Kidoz Inc 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 Kidoz i.e., Kidoz and WPP Plc go up and down completely randomly.

Pair Corralation between Kidoz and WPP Plc

Assuming the 90 days horizon Kidoz Inc is expected to generate 23.67 times more return on investment than WPP Plc. However, Kidoz is 23.67 times more volatile than WPP plc. It trades about 0.12 of its potential returns per unit of risk. WPP plc is currently generating about 0.05 per unit of risk. If you would invest  20.00  in Kidoz Inc on September 17, 2024 and sell it today you would lose (15.00) from holding Kidoz Inc or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.52%
Values	Daily Returns

Kidoz Inc  vs.  WPP plc

Kidoz Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kidoz Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kidoz reported solid returns over the last few months and may actually be approaching a breakup point.

WPP plc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WPP plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, WPP Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kidoz and WPP Plc

The main advantage of trading using opposite Kidoz and WPP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kidoz 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.

The idea behind Kidoz Inc and WPP plc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.