Correlation Between De Grey and WPP PLC
Can any of the company-specific risk be diversified away by investing in both De Grey 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 De Grey and WPP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and WPP PLC, you can compare the effects of market volatilities on De Grey 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 De Grey with a short position of WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and WPP PLC.
Diversification Opportunities for De Grey and WPP PLC
Very weak diversification
The 3 months correlation between DGD and WPP is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and WPP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC and De Grey 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 De Grey Mining 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 De Grey i.e., De Grey and WPP PLC go up and down completely randomly.
Pair Corralation between De Grey and WPP PLC
Assuming the 90 days trading horizon De Grey Mining is expected to generate 1.51 times more return on investment than WPP PLC. However, De Grey is 1.51 times more volatile than WPP PLC. It trades about -0.07 of its potential returns per unit of risk. WPP PLC is currently generating about -0.78 per unit of risk. If you would invest 118.00 in De Grey Mining on October 13, 2024 and sell it today you would lose (4.00) from holding De Grey Mining or give up 3.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
De Grey Mining vs. WPP PLC
Performance |
| Timeline |
| De Grey Mining |
| WPP PLC |
De Grey and WPP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and WPP PLC
The main advantage of trading using opposite De Grey and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey 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.| De Grey vs. TRADEGATE | De Grey vs. Canon Marketing Japan | De Grey vs. Cincinnati Financial Corp | De Grey vs. JSC Halyk bank |
| WPP PLC vs. Yanzhou Coal Mining | WPP PLC vs. Harmony Gold Mining | WPP PLC vs. De Grey Mining | WPP PLC vs. Axway Software SA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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