Correlation Between MGO Global and WPP Plc
Can any of the company-specific risk be diversified away by investing in both MGO Global 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 MGO Global and WPP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGO Global Common and WPP plc, you can compare the effects of market volatilities on MGO Global 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 MGO Global with a short position of WPP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGO Global and WPP Plc.
Diversification Opportunities for MGO Global and WPP Plc
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGO and WPP is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding MGO Global Common and WPP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP plc and MGO Global 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 MGO Global Common 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 MGO Global i.e., MGO Global and WPP Plc go up and down completely randomly.
Pair Corralation between MGO Global and WPP Plc
Given the investment horizon of 90 days MGO Global Common is expected to under-perform the WPP Plc. In addition to that, MGO Global is 1.06 times more volatile than WPP plc. It trades about -0.1 of its total potential returns per unit of risk. WPP plc is currently generating about 0.02 per unit of volatility. If you would invest 1,049 in WPP plc on September 2, 2024 and sell it today you would earn a total of 5.00 from holding WPP plc or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGO Global Common vs. WPP plc
Performance |
| Timeline |
| MGO Global Common |
| WPP plc |
MGO Global and WPP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGO Global and WPP Plc
The main advantage of trading using opposite MGO Global and WPP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGO Global 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.| MGO Global vs. ADTRAN Inc | MGO Global vs. Belden Inc | MGO Global vs. ADC Therapeutics SA | MGO Global vs. Comtech Telecommunications Corp |
| WPP Plc vs. Beyond Commerce | WPP Plc vs. Baosheng Media Group | WPP Plc vs. MGO Global Common | WPP Plc vs. CMG Holdings Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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