Correlation Between Apple and Publicis Groupe

Can any of the company-specific risk be diversified away by investing in both Apple and Publicis Groupe 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 Apple and Publicis Groupe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and Publicis Groupe SA, you can compare the effects of market volatilities on Apple and Publicis Groupe 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 Apple with a short position of Publicis Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Publicis Groupe.

Diversification Opportunities for Apple and Publicis Groupe

0.63

Correlation Coefficient

Apple  Publicis Groupe

Poor diversification

The 3 months correlation between Apple and Publicis is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Publicis Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Publicis Groupe SA and Apple 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 Apple Inc are associated (or correlated) with Publicis Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Publicis Groupe SA has no effect on the direction of Apple i.e., Apple and Publicis Groupe go up and down completely randomly.

Pair Corralation between Apple and Publicis Groupe

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.83 times more return on investment than Publicis Groupe. However, Apple Inc is 1.2 times less risky than Publicis Groupe. It trades about 0.13 of its potential returns per unit of risk. Publicis Groupe SA is currently generating about 0.04 per unit of risk. If you would invest  20,086  in Apple Inc on September 3, 2024 and sell it today you would earn a total of  2,309  from holding Apple Inc or generate 11.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  Publicis Groupe SA

Apple Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Publicis Groupe SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Publicis Groupe SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Publicis Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apple and Publicis Groupe

The main advantage of trading using opposite Apple and Publicis Groupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Publicis Groupe 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 Publicis Groupe will offset losses from the drop in Publicis Groupe's long position.

The idea behind Apple Inc and Publicis Groupe SA 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.