Correlation Between Stagwell and Oak Woods
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
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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Stagwell vs. Oak Woods Acquisition
Performance |
Timeline |
Stagwell |
Oak Woods Acquisition |
Stagwell and Oak Woods Volatility Contrast
Predicted Return Density |
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.Stagwell vs. Interpublic Group of | ||
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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