Correlation Between Falcon Oil and WPP PLC
Can any of the company-specific risk be diversified away by investing in both Falcon Oil 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 Falcon Oil and WPP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Oil Gas and WPP PLC, you can compare the effects of market volatilities on Falcon Oil 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 Falcon Oil with a short position of WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Oil and WPP PLC.
Diversification Opportunities for Falcon Oil and WPP PLC
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Falcon and WPP is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil Gas and WPP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC and Falcon Oil 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 Falcon Oil Gas 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 Falcon Oil i.e., Falcon Oil and WPP PLC go up and down completely randomly.
Pair Corralation between Falcon Oil and WPP PLC
Assuming the 90 days trading horizon Falcon Oil Gas is expected to under-perform the WPP PLC. In addition to that, Falcon Oil is 2.25 times more volatile than WPP PLC. It trades about -0.05 of its total potential returns per unit of risk. WPP PLC is currently generating about 0.01 per unit of volatility. If you would invest 80,569 in WPP PLC on August 27, 2024 and sell it today you would earn a total of 2,751 from holding WPP PLC or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Oil Gas vs. WPP PLC
Performance |
| Timeline |
| Falcon Oil Gas |
| WPP PLC |
Falcon Oil and WPP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Oil and WPP PLC
The main advantage of trading using opposite Falcon Oil and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Oil 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.| Falcon Oil vs. Zoom Video Communications | Falcon Oil vs. Enbridge | Falcon Oil vs. Endo International PLC |
| WPP PLC vs. Rockfire Resources plc | WPP PLC vs. Tlou Energy | WPP PLC vs. Ikigai Ventures | WPP PLC vs. Falcon Oil Gas |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |