Correlation Between Stagwell and Oak Woods

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Can any of the company-specific risk be diversified away by investing in both Stagwell and Oak Woods 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 Stagwell and Oak Woods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stagwell and Oak Woods Acquisition, you can compare the effects of market volatilities on Stagwell and Oak Woods 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 Stagwell with a short position of Oak Woods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and Oak Woods.

Diversification Opportunities for Stagwell and Oak Woods

StagwellOakDiversified AwayStagwellOakDiversified Away100%
-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Stagwell and Oak is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Oak Woods Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Woods Acquisition and Stagwell 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 Stagwell are associated (or correlated) with Oak Woods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Woods Acquisition has no effect on the direction of Stagwell i.e., Stagwell and Oak Woods go up and down completely randomly.

Pair Corralation between Stagwell and Oak Woods

Given the investment horizon of 90 days Stagwell is expected to generate 4.63 times more return on investment than Oak Woods. However, Stagwell is 4.63 times more volatile than Oak Woods Acquisition. It trades about 0.02 of its potential returns per unit of risk. Oak Woods Acquisition is currently generating about 0.03 per unit of risk. If you would invest  640.00  in Stagwell on November 26, 2024 and sell it today you would earn a total of  6.00  from holding Stagwell or generate 0.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Stagwell  vs.  Oak Woods Acquisition

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-505
JavaScript chart by amCharts 3.21.15STGW OAKUU
       Timeline  
Stagwell 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb66.577.58
Oak Woods Acquisition 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Oak Woods Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Oak Woods is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.411.511.611.711.811.912

Stagwell and Oak Woods Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.7-2.77-1.84-0.91-0.01390.811.642.483.324.15 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15STGW OAKUU
       Returns  

Pair Trading with Stagwell and Oak Woods

The main advantage of trading using opposite Stagwell and Oak Woods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell position performs unexpectedly, Oak Woods 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 Oak Woods will offset losses from the drop in Oak Woods' long position.
The idea behind Stagwell and Oak Woods Acquisition 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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