Correlation Between Interpublic Group and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Interpublic Group and Cairn Homes 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 Interpublic Group and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interpublic Group of and Cairn Homes PLC, you can compare the effects of market volatilities on Interpublic Group and Cairn Homes 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 Interpublic Group with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interpublic Group and Cairn Homes.
Diversification Opportunities for Interpublic Group and Cairn Homes
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Interpublic and Cairn is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Interpublic Group 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 Interpublic Group of are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Interpublic Group i.e., Interpublic Group and Cairn Homes go up and down completely randomly.
Pair Corralation between Interpublic Group and Cairn Homes
Assuming the 90 days trading horizon Interpublic Group of is expected to under-perform the Cairn Homes. In addition to that, Interpublic Group is 1.06 times more volatile than Cairn Homes PLC. It trades about -0.01 of its total potential returns per unit of risk. Cairn Homes PLC is currently generating about 0.12 per unit of volatility. If you would invest 7,689 in Cairn Homes PLC on October 9, 2024 and sell it today you would earn a total of 11,751 from holding Cairn Homes PLC or generate 152.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.99% |
| Values | Daily Returns |
Interpublic Group of vs. Cairn Homes PLC
Performance |
| Timeline |
| Interpublic Group |
| Cairn Homes PLC |
Interpublic Group and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interpublic Group and Cairn Homes
The main advantage of trading using opposite Interpublic Group and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interpublic Group position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Interpublic Group vs. Walmart | Interpublic Group vs. BYD Co | Interpublic Group vs. Volkswagen AG | Interpublic Group vs. Volkswagen AG Non Vtg |
| Cairn Homes vs. Capital Metals PLC | Cairn Homes vs. Intermediate Capital Group | Cairn Homes vs. Adriatic Metals | Cairn Homes vs. LBG Media PLC |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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