Correlation Between MGO Global and Publicis Groupe

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

By analyzing existing cross correlation between MGO Global Common and Publicis Groupe SA, you can compare the effects of market volatilities on MGO Global and Publicis Groupe 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 MGO Global with a short position of Publicis Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGO Global and Publicis Groupe.

Diversification Opportunities for MGO Global and Publicis Groupe

-0.58

Correlation Coefficient

MGO Global  Publicis Groupe

Excellent diversification

The 3 months correlation between MGO and Publicis is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding MGO Global Common and Publicis Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Publicis Groupe SA and MGO Global 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 MGO Global Common are associated (or correlated) with Publicis Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Publicis Groupe SA has no effect on the direction of MGO Global i.e., MGO Global and Publicis Groupe go up and down completely randomly.

Pair Corralation between MGO Global and Publicis Groupe

Given the investment horizon of 90 days MGO Global Common is expected to generate 12.87 times more return on investment than Publicis Groupe. However, MGO Global is 12.87 times more volatile than Publicis Groupe SA. It trades about 0.01 of its potential returns per unit of risk. Publicis Groupe SA is currently generating about 0.1 per unit of risk. If you would invest  4,900  in MGO Global Common on October 8, 2024 and sell it today you would lose (4,833) from holding MGO Global Common or give up 98.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	26.16%
Values	Daily Returns

MGO Global Common  vs.  Publicis Groupe SA

MGO Global Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGO Global Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Publicis Groupe SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Publicis Groupe SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Publicis Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MGO Global and Publicis Groupe

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

The idea behind MGO Global Common and Publicis Groupe SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.