Correlation Between Interpublic Group and Stagwell

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

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

Diversification Opportunities for Interpublic Group and Stagwell

-0.19

Correlation Coefficient

Interpublic Group  Stagwell

Good diversification

The 3 months correlation between Interpublic and Stagwell is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell and Interpublic Group 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 Interpublic Group of are associated (or correlated) with Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Interpublic Group i.e., Interpublic Group and Stagwell go up and down completely randomly.

Pair Corralation between Interpublic Group and Stagwell

Considering the 90-day investment horizon Interpublic Group is expected to generate 5.35 times less return on investment than Stagwell. But when comparing it to its historical volatility, Interpublic Group of is 1.38 times less risky than Stagwell. It trades about 0.01 of its potential returns per unit of risk. Stagwell is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  705.00  in Stagwell on September 12, 2024 and sell it today you would earn a total of  45.00  from holding Stagwell or generate 6.38% return on investment over 90 days.

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

Interpublic Group of  vs.  Stagwell

Interpublic Group

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Interpublic Group of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Interpublic Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Stagwell

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stagwell are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Stagwell may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Interpublic Group and Stagwell

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

The idea behind Interpublic Group of and Stagwell 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.