Correlation Between Interpublic Group and Dentsu
Can any of the company-specific risk be diversified away by investing in both Interpublic Group and Dentsu 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 Interpublic Group and Dentsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interpublic Group of and Dentsu Inc, you can compare the effects of market volatilities on Interpublic Group and Dentsu 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 Interpublic Group with a short position of Dentsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interpublic Group and Dentsu.
Diversification Opportunities for Interpublic Group and Dentsu
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Interpublic and Dentsu is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Dentsu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsu Inc and Interpublic Group 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 Interpublic Group of are associated (or correlated) with Dentsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsu Inc has no effect on the direction of Interpublic Group i.e., Interpublic Group and Dentsu go up and down completely randomly.
Pair Corralation between Interpublic Group and Dentsu
Considering the 90-day investment horizon Interpublic Group of is expected to generate 0.35 times more return on investment than Dentsu. However, Interpublic Group of is 2.89 times less risky than Dentsu. It trades about 0.11 of its potential returns per unit of risk. Dentsu Inc is currently generating about -0.09 per unit of risk. If you would invest 2,948 in Interpublic Group of on September 2, 2024 and sell it today you would earn a total of 133.00 from holding Interpublic Group of or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 19.05% |
| Values | Daily Returns |
Interpublic Group of vs. Dentsu Inc
Performance |
| Timeline |
| Interpublic Group |
| Dentsu Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Interpublic Group and Dentsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interpublic Group and Dentsu
The main advantage of trading using opposite Interpublic Group and Dentsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interpublic Group position performs unexpectedly, Dentsu 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 Dentsu will offset losses from the drop in Dentsu's long position.| Interpublic Group vs. Ziff Davis | Interpublic Group vs. Criteo Sa | Interpublic Group vs. WPP PLC ADR | Interpublic Group vs. Integral Ad Science |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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