Correlation Between WPP PLC and HANOVER
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By analyzing existing cross correlation between WPP PLC ADR and HANOVER INS GROUP, you can compare the effects of market volatilities on WPP PLC and HANOVER 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 HANOVER. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and HANOVER.
Diversification Opportunities for WPP PLC and HANOVER
Very good diversification
The 3 months correlation between WPP and HANOVER is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC ADR and HANOVER INS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INS GROUP 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 HANOVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANOVER INS GROUP has no effect on the direction of WPP PLC i.e., WPP PLC and HANOVER go up and down completely randomly.
Pair Corralation between WPP PLC and HANOVER
Considering the 90-day investment horizon WPP PLC ADR is expected to generate 4.27 times more return on investment than HANOVER. However, WPP PLC is 4.27 times more volatile than HANOVER INS GROUP. It trades about 0.14 of its potential returns per unit of risk. HANOVER INS GROUP is currently generating about -0.15 per unit of risk. If you would invest 5,249 in WPP PLC ADR on September 1, 2024 and sell it today you would earn a total of 218.00 from holding WPP PLC ADR or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
WPP PLC ADR vs. HANOVER INS GROUP
Performance |
| Timeline |
| WPP PLC ADR |
| HANOVER INS GROUP |
WPP PLC and HANOVER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPP PLC and HANOVER
The main advantage of trading using opposite WPP PLC and HANOVER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP PLC position performs unexpectedly, HANOVER 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 HANOVER will offset losses from the drop in HANOVER's long position.The idea behind WPP PLC ADR and HANOVER INS GROUP 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.| HANOVER vs. Weibo Corp | HANOVER vs. Arrow Electronics | HANOVER vs. The Gap, | HANOVER vs. Asbury Automotive Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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