Correlation Between Stagwell and Salon City

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

By analyzing existing cross correlation between Stagwell and Salon City, you can compare the effects of market volatilities on Stagwell and Salon City 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 Salon City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and Salon City.

Diversification Opportunities for Stagwell and Salon City

0.25

Correlation Coefficient

Stagwell  Salon City

Modest diversification

The 3 months correlation between Stagwell and Salon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Salon City in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salon City 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 Salon City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salon City has no effect on the direction of Stagwell i.e., Stagwell and Salon City go up and down completely randomly.

Pair Corralation between Stagwell and Salon City

If you would invest  627.00  in Stagwell on October 27, 2024 and sell it today you would earn a total of  25.00  from holding Stagwell or generate 3.99% return on investment over 90 days.

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

Stagwell  vs.  Salon City

Stagwell

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stagwell are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Stagwell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Salon City

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salon City has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Salon City is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Stagwell and Salon City

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

The idea behind Stagwell and Salon City 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.