Correlation Between Criteo Sa and WPP PLC
Can any of the company-specific risk be diversified away by investing in both Criteo Sa 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 Criteo Sa and WPP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Criteo Sa and WPP PLC ADR, you can compare the effects of market volatilities on Criteo Sa 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 Criteo Sa with a short position of WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Criteo Sa and WPP PLC.
Diversification Opportunities for Criteo Sa and WPP PLC
Pay attention - limited upside
The 3 months correlation between Criteo and WPP is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Criteo Sa and WPP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC ADR and Criteo Sa 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 Criteo Sa 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 ADR has no effect on the direction of Criteo Sa i.e., Criteo Sa and WPP PLC go up and down completely randomly.
Pair Corralation between Criteo Sa and WPP PLC
Given the investment horizon of 90 days Criteo Sa is expected to generate 3.6 times more return on investment than WPP PLC. However, Criteo Sa is 3.6 times more volatile than WPP PLC ADR. It trades about 0.01 of its potential returns per unit of risk. WPP PLC ADR is currently generating about -0.03 per unit of risk. If you would invest 4,094 in Criteo Sa on August 27, 2024 and sell it today you would lose (98.00) from holding Criteo Sa or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Criteo Sa vs. WPP PLC ADR
Performance |
| Timeline |
| Criteo Sa |
| WPP PLC ADR |
Criteo Sa and WPP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Criteo Sa and WPP PLC
The main advantage of trading using opposite Criteo Sa and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Criteo Sa 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.| Criteo Sa vs. Deluxe | Criteo Sa vs. Emerald Expositions Events | Criteo Sa vs. Marchex | Criteo Sa vs. Integral Ad Science |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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