Correlation Between Publicis Groupe and Prodways Group
Can any of the company-specific risk be diversified away by investing in both Publicis Groupe and Prodways 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 Publicis Groupe and Prodways Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Publicis Groupe SA and Prodways Group SA, you can compare the effects of market volatilities on Publicis Groupe and Prodways 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 Publicis Groupe with a short position of Prodways Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Publicis Groupe and Prodways Group.
Diversification Opportunities for Publicis Groupe and Prodways Group
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Publicis and Prodways is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Publicis Groupe SA and Prodways Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodways Group SA and Publicis Groupe 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 Publicis Groupe SA are associated (or correlated) with Prodways Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodways Group SA has no effect on the direction of Publicis Groupe i.e., Publicis Groupe and Prodways Group go up and down completely randomly.
Pair Corralation between Publicis Groupe and Prodways Group
Assuming the 90 days trading horizon Publicis Groupe SA is expected to generate 1.34 times more return on investment than Prodways Group. However, Publicis Groupe is 1.34 times more volatile than Prodways Group SA. It trades about 0.04 of its potential returns per unit of risk. Prodways Group SA is currently generating about -0.19 per unit of risk. If you would invest 10,125 in Publicis Groupe SA on August 28, 2024 and sell it today you would earn a total of 135.00 from holding Publicis Groupe SA or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Publicis Groupe SA vs. Prodways Group SA
Performance |
| Timeline |
| Publicis Groupe SA |
| Prodways Group SA |
Publicis Groupe and Prodways Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Publicis Groupe and Prodways Group
The main advantage of trading using opposite Publicis Groupe and Prodways Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Publicis Groupe position performs unexpectedly, Prodways 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 Prodways Group will offset losses from the drop in Prodways Group's long position.| Publicis Groupe vs. Bouygues SA | Publicis Groupe vs. Legrand SA | Publicis Groupe vs. Sodexo SA | Publicis Groupe vs. Compagnie de Saint Gobain |
| Prodways Group vs. Publicis Groupe SA | Prodways Group vs. Pernod Ricard SA | Prodways Group vs. Compagnie Generale des | Prodways Group vs. Compagnie de Saint Gobain |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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