Correlation Between WPP PLC and Grupo Televisa

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

By analyzing existing cross correlation between WPP PLC ADR and Grupo Televisa SAB, you can compare the effects of market volatilities on WPP PLC and Grupo Televisa 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 WPP PLC with a short position of Grupo Televisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and Grupo Televisa.

Diversification Opportunities for WPP PLC and Grupo Televisa

-0.01

Correlation Coefficient

WPP PLC  Grupo Televisa

Good diversification

The 3 months correlation between WPP and Grupo is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC ADR and Grupo Televisa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Televisa SAB and WPP PLC 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 WPP PLC ADR are associated (or correlated) with Grupo Televisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Televisa SAB has no effect on the direction of WPP PLC i.e., WPP PLC and Grupo Televisa go up and down completely randomly.

Pair Corralation between WPP PLC and Grupo Televisa

Considering the 90-day investment horizon WPP PLC ADR is expected to under-perform the Grupo Televisa. But the stock apears to be less risky and, when comparing its historical volatility, WPP PLC ADR is 1.56 times less risky than Grupo Televisa. The stock trades about -0.73 of its potential returns per unit of risk. The Grupo Televisa SAB is currently generating about -0.38 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Grupo Televisa SAB on October 10, 2024 and sell it today you would lose (6.00) from holding Grupo Televisa SAB or give up 15.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

WPP PLC ADR  vs.  Grupo Televisa SAB

WPP PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WPP PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, WPP PLC is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Grupo Televisa SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Televisa SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with WPP PLC and Grupo Televisa

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

The idea behind WPP PLC ADR and Grupo Televisa SAB 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.