Correlation Between WPP PLC and Nextmart
Can any of the company-specific risk be diversified away by investing in both WPP PLC and Nextmart 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 Nextmart 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 Nextmart, you can compare the effects of market volatilities on WPP PLC and Nextmart 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 Nextmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and Nextmart.
Diversification Opportunities for WPP PLC and Nextmart
Excellent diversification
The 3 months correlation between WPP and Nextmart is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC ADR and Nextmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextmart 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 Nextmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextmart has no effect on the direction of WPP PLC i.e., WPP PLC and Nextmart go up and down completely randomly.
Pair Corralation between WPP PLC and Nextmart
If you would invest 0.06 in Nextmart on December 6, 2024 and sell it today you would earn a total of 0.00 from holding Nextmart or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPP PLC ADR vs. Nextmart
Performance |
| Timeline |
| WPP PLC ADR |
| Nextmart |
WPP PLC and Nextmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPP PLC and Nextmart
The main advantage of trading using opposite WPP PLC and Nextmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP PLC position performs unexpectedly, Nextmart 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 Nextmart will offset losses from the drop in Nextmart's long position.The idea behind WPP PLC ADR and Nextmart 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.| Nextmart vs. Genesis Electronics Group | Nextmart vs. Industrial Nanotech | Nextmart vs. Intl Star | Nextmart vs. HeadsUp Entertainment International |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |