Correlation Between CMG Holdings and WPP Plc
Can any of the company-specific risk be diversified away by investing in both CMG Holdings and WPP Plc 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 CMG Holdings and WPP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMG Holdings Group and WPP plc, you can compare the effects of market volatilities on CMG Holdings and WPP Plc 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 CMG Holdings with a short position of WPP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMG Holdings and WPP Plc.
Diversification Opportunities for CMG Holdings and WPP Plc
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CMG and WPP is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CMG Holdings Group and WPP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP plc and CMG Holdings 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 CMG Holdings Group are associated (or correlated) with WPP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP plc has no effect on the direction of CMG Holdings i.e., CMG Holdings and WPP Plc go up and down completely randomly.
Pair Corralation between CMG Holdings and WPP Plc
Given the investment horizon of 90 days CMG Holdings Group is expected to generate 3.7 times more return on investment than WPP Plc. However, CMG Holdings is 3.7 times more volatile than WPP plc. It trades about 0.1 of its potential returns per unit of risk. WPP plc is currently generating about 0.02 per unit of risk. If you would invest 0.16 in CMG Holdings Group on September 2, 2024 and sell it today you would earn a total of 0.02 from holding CMG Holdings Group or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMG Holdings Group vs. WPP plc
Performance |
| Timeline |
| CMG Holdings Group |
| WPP plc |
CMG Holdings and WPP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMG Holdings and WPP Plc
The main advantage of trading using opposite CMG Holdings and WPP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMG Holdings position performs unexpectedly, WPP Plc 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 WPP Plc will offset losses from the drop in WPP Plc's long position.| CMG Holdings vs. Tautachrome | CMG Holdings vs. VNUE Inc | CMG Holdings vs. South Beach Spirits | CMG Holdings vs. North Bay Resources |
| WPP Plc vs. Beyond Commerce | WPP Plc vs. Baosheng Media Group | WPP Plc vs. MGO Global Common | WPP Plc vs. CMG Holdings Group |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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