Correlation Between Naspers and Interpublic Group
Can any of the company-specific risk be diversified away by investing in both Naspers and Interpublic Group 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 Naspers and Interpublic Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naspers Ltd ADR and Interpublic Group of, you can compare the effects of market volatilities on Naspers and Interpublic Group 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 Naspers with a short position of Interpublic Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naspers and Interpublic Group.
Diversification Opportunities for Naspers and Interpublic Group
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Naspers and Interpublic is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Naspers Ltd ADR and Interpublic Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interpublic Group and Naspers 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 Naspers Ltd ADR are associated (or correlated) with Interpublic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interpublic Group has no effect on the direction of Naspers i.e., Naspers and Interpublic Group go up and down completely randomly.
Pair Corralation between Naspers and Interpublic Group
Assuming the 90 days horizon Naspers Ltd ADR is expected to generate 1.67 times more return on investment than Interpublic Group. However, Naspers is 1.67 times more volatile than Interpublic Group of. It trades about 0.04 of its potential returns per unit of risk. Interpublic Group of is currently generating about 0.01 per unit of risk. If you would invest 3,170 in Naspers Ltd ADR on August 30, 2024 and sell it today you would earn a total of 442.00 from holding Naspers Ltd ADR or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.05% |
| Values | Daily Returns |
Naspers Ltd ADR vs. Interpublic Group of
Performance |
| Timeline |
| Naspers Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Interpublic Group |
Naspers and Interpublic Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naspers and Interpublic Group
The main advantage of trading using opposite Naspers and Interpublic Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naspers position performs unexpectedly, Interpublic Group 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 Interpublic Group will offset losses from the drop in Interpublic Group's long position.The idea behind Naspers Ltd ADR and Interpublic Group of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Interpublic Group vs. Ziff Davis | Interpublic Group vs. Criteo Sa | Interpublic Group vs. WPP PLC ADR | Interpublic Group vs. Integral Ad Science |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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