Correlation Between Media and Publicis Groupe
Can any of the company-specific risk be diversified away by investing in both Media and Publicis Groupe 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 Media and Publicis Groupe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and Publicis Groupe SA, you can compare the effects of market volatilities on Media and Publicis Groupe 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 Media with a short position of Publicis Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and Publicis Groupe.
Diversification Opportunities for Media and Publicis Groupe
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Media and Publicis is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Publicis Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Publicis Groupe SA and Media 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 Media and Games are associated (or correlated) with Publicis Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Publicis Groupe SA has no effect on the direction of Media i.e., Media and Publicis Groupe go up and down completely randomly.
Pair Corralation between Media and Publicis Groupe
Assuming the 90 days trading horizon Media and Games is expected to under-perform the Publicis Groupe. In addition to that, Media is 2.03 times more volatile than Publicis Groupe SA. It trades about -0.09 of its total potential returns per unit of risk. Publicis Groupe SA is currently generating about 0.08 per unit of volatility. If you would invest 9,864 in Publicis Groupe SA on August 31, 2024 and sell it today you would earn a total of 286.00 from holding Publicis Groupe SA or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media and Games vs. Publicis Groupe SA
Performance |
| Timeline |
| Media and Games |
| Publicis Groupe SA |
Media and Publicis Groupe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and Publicis Groupe
The main advantage of trading using opposite Media and Publicis Groupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media position performs unexpectedly, Publicis Groupe 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 Publicis Groupe will offset losses from the drop in Publicis Groupe's long position.| Media vs. INFORMATION SVC GRP | Media vs. Bausch Health Companies | Media vs. National Health Investors | Media vs. Automatic Data Processing |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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