Correlation Between WPP PLC and Identiv
Can any of the company-specific risk be diversified away by investing in both WPP PLC and Identiv 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 Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPP PLC and Identiv, you can compare the effects of market volatilities on WPP PLC and Identiv 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 Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and Identiv.
Diversification Opportunities for WPP PLC and Identiv
Very poor diversification
The 3 months correlation between WPP and Identiv is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv 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 are associated (or correlated) with Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of WPP PLC i.e., WPP PLC and Identiv go up and down completely randomly.
Pair Corralation between WPP PLC and Identiv
Assuming the 90 days horizon WPP PLC is expected to generate 1.04 times less return on investment than Identiv. But when comparing it to its historical volatility, WPP PLC is 1.66 times less risky than Identiv. It trades about 0.19 of its potential returns per unit of risk. Identiv is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 297.00 in Identiv on September 2, 2024 and sell it today you would earn a total of 63.00 from holding Identiv or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPP PLC vs. Identiv
Performance |
| Timeline |
| WPP PLC |
| Identiv |
WPP PLC and Identiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPP PLC and Identiv
The main advantage of trading using opposite WPP PLC and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP PLC position performs unexpectedly, Identiv 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 Identiv will offset losses from the drop in Identiv's long position.| WPP PLC vs. USWE SPORTS AB | WPP PLC vs. Columbia Sportswear | WPP PLC vs. Sporttotal AG | WPP PLC vs. Vulcan Materials |
| Identiv vs. SBA Communications Corp | Identiv vs. Verizon Communications | Identiv vs. Iridium Communications | Identiv vs. THORNEY TECHS LTD |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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