Correlation Between WPP PLC and Valneva SE
Can any of the company-specific risk be diversified away by investing in both WPP PLC and Valneva SE 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 Valneva SE 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 Valneva SE ADR, you can compare the effects of market volatilities on WPP PLC and Valneva SE 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 Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and Valneva SE.
Diversification Opportunities for WPP PLC and Valneva SE
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WPP and Valneva is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC ADR and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of WPP PLC i.e., WPP PLC and Valneva SE go up and down completely randomly.
Pair Corralation between WPP PLC and Valneva SE
Considering the 90-day investment horizon WPP PLC ADR is expected to generate 0.37 times more return on investment than Valneva SE. However, WPP PLC ADR is 2.67 times less risky than Valneva SE. It trades about 0.07 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.2 per unit of risk. If you would invest 5,018 in WPP PLC ADR on September 22, 2024 and sell it today you would earn a total of 211.00 from holding WPP PLC ADR or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPP PLC ADR vs. Valneva SE ADR
Performance |
| Timeline |
| WPP PLC ADR |
| Valneva SE ADR |
WPP PLC and Valneva SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPP PLC and Valneva SE
The main advantage of trading using opposite WPP PLC and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP PLC position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE's long position.The idea behind WPP PLC ADR and Valneva SE ADR 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.| Valneva SE vs. NuCana PLC | Valneva SE vs. Sage Therapeutic | Valneva SE vs. Sellas Life Sciences | Valneva SE vs. Third Harmonic Bio |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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