Correlation Between WPP PLC and Marcus
Can any of the company-specific risk be diversified away by investing in both WPP PLC and Marcus 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 WPP PLC and Marcus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPP PLC ADR and Marcus, you can compare the effects of market volatilities on WPP PLC and Marcus 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 WPP PLC with a short position of Marcus. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and Marcus.
Diversification Opportunities for WPP PLC and Marcus
Almost no diversification
The 3 months correlation between WPP and Marcus is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC ADR and Marcus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus and WPP PLC 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 WPP PLC ADR are associated (or correlated) with Marcus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus has no effect on the direction of WPP PLC i.e., WPP PLC and Marcus go up and down completely randomly.
Pair Corralation between WPP PLC and Marcus
Considering the 90-day investment horizon WPP PLC ADR is expected to under-perform the Marcus. But the stock apears to be less risky and, when comparing its historical volatility, WPP PLC ADR is 1.15 times less risky than Marcus. The stock trades about -0.06 of its potential returns per unit of risk. The Marcus is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,056 in Marcus on January 11, 2025 and sell it today you would earn a total of 542.00 from holding Marcus or generate 51.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPP PLC ADR vs. Marcus
Performance |
| Timeline |
| WPP PLC ADR |
| Marcus |
WPP PLC and Marcus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPP PLC and Marcus
The main advantage of trading using opposite WPP PLC and Marcus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP PLC position performs unexpectedly, Marcus 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 Marcus will offset losses from the drop in Marcus' long position.The idea behind WPP PLC ADR and Marcus 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.| Marcus vs. News Corp A | Marcus vs. Liberty Media | Marcus vs. Warner Music Group | Marcus vs. Fox Corp Class |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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