Correlation Between Stagwell and 90932LAH0

Can any of the company-specific risk be diversified away by investing in both Stagwell and 90932LAH0 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 90932LAH0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stagwell and US90932LAH06, you can compare the effects of market volatilities on Stagwell and 90932LAH0 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 90932LAH0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and 90932LAH0.

Diversification Opportunities for Stagwell and 90932LAH0

0.34

Correlation Coefficient

Stagwell  90932LAH0

Weak diversification

The 3 months correlation between Stagwell and 90932LAH0 is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and US90932LAH06 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US90932LAH06 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 90932LAH0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US90932LAH06 has no effect on the direction of Stagwell i.e., Stagwell and 90932LAH0 go up and down completely randomly.

Pair Corralation between Stagwell and 90932LAH0

Given the investment horizon of 90 days Stagwell is expected to generate 7.09 times more return on investment than 90932LAH0. However, Stagwell is 7.09 times more volatile than US90932LAH06. It trades about 0.01 of its potential returns per unit of risk. US90932LAH06 is currently generating about 0.02 per unit of risk. If you would invest  691.00  in Stagwell on October 11, 2024 and sell it today you would lose (70.00) from holding Stagwell or give up 10.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Stagwell  vs.  US90932LAH06

Stagwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

US90932LAH06

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in US90932LAH06 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 90932LAH0 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stagwell and 90932LAH0

The main advantage of trading using opposite Stagwell and 90932LAH0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell position performs unexpectedly, 90932LAH0 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 90932LAH0 will offset losses from the drop in 90932LAH0's long position.

The idea behind Stagwell and US90932LAH06 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.