Correlation Between WPP PLC and Vestis
Can any of the company-specific risk be diversified away by investing in both WPP PLC and Vestis 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 Vestis 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 Vestis, you can compare the effects of market volatilities on WPP PLC and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and Vestis.
Diversification Opportunities for WPP PLC and Vestis
Average diversification
The 3 months correlation between WPP and Vestis is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC ADR and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of WPP PLC i.e., WPP PLC and Vestis go up and down completely randomly.
Pair Corralation between WPP PLC and Vestis
Considering the 90-day investment horizon WPP PLC ADR is expected to generate 0.4 times more return on investment than Vestis. However, WPP PLC ADR is 2.52 times less risky than Vestis. It trades about 0.08 of its potential returns per unit of risk. Vestis is currently generating about 0.02 per unit of risk. If you would invest 4,209 in WPP PLC ADR on September 14, 2024 and sell it today you would earn a total of 1,389 from holding WPP PLC ADR or generate 33.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPP PLC ADR vs. Vestis
Performance |
| Timeline |
| WPP PLC ADR |
| Vestis |
WPP PLC and Vestis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPP PLC and Vestis
The main advantage of trading using opposite WPP PLC and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP PLC position performs unexpectedly, Vestis 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 Vestis will offset losses from the drop in Vestis' long position.The idea behind WPP PLC ADR and Vestis 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.| Vestis vs. McGrath RentCorp | Vestis vs. Custom Truck One | Vestis vs. Herc Holdings | Vestis vs. Alta Equipment 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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