Correlation Between Malaga Financial and WPP PLC
Can any of the company-specific risk be diversified away by investing in both Malaga Financial 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 Malaga Financial and WPP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malaga Financial and WPP PLC ADR, you can compare the effects of market volatilities on Malaga Financial 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 Malaga Financial with a short position of WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malaga Financial and WPP PLC.
Diversification Opportunities for Malaga Financial and WPP PLC
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Malaga and WPP is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Malaga Financial and WPP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC ADR and Malaga Financial 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 Malaga Financial 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 ADR has no effect on the direction of Malaga Financial i.e., Malaga Financial and WPP PLC go up and down completely randomly.
Pair Corralation between Malaga Financial and WPP PLC
Given the investment horizon of 90 days Malaga Financial is expected to generate 2.9 times less return on investment than WPP PLC. But when comparing it to its historical volatility, Malaga Financial is 1.55 times less risky than WPP PLC. It trades about 0.04 of its potential returns per unit of risk. WPP PLC ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,256 in WPP PLC ADR on September 1, 2024 and sell it today you would earn a total of 1,211 from holding WPP PLC ADR or generate 28.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.32% |
| Values | Daily Returns |
Malaga Financial vs. WPP PLC ADR
Performance |
| Timeline |
| Malaga Financial |
| WPP PLC ADR |
Malaga Financial and WPP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malaga Financial and WPP PLC
The main advantage of trading using opposite Malaga Financial and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malaga Financial 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.| Malaga Financial vs. MF Bancorp | Malaga Financial vs. United Bancorporation of | Malaga Financial vs. Harbor Bankshares | Malaga Financial vs. BankFirst Capital |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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