Correlation Between Interpublic Group and SohuCom
Can any of the company-specific risk be diversified away by investing in both Interpublic Group and SohuCom 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 SohuCom 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 SohuCom, you can compare the effects of market volatilities on Interpublic Group and SohuCom 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 SohuCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interpublic Group and SohuCom.
Diversification Opportunities for Interpublic Group and SohuCom
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Interpublic and SohuCom is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and SohuCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SohuCom 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 SohuCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SohuCom has no effect on the direction of Interpublic Group i.e., Interpublic Group and SohuCom go up and down completely randomly.
Pair Corralation between Interpublic Group and SohuCom
Considering the 90-day investment horizon Interpublic Group of is expected to generate 0.71 times more return on investment than SohuCom. However, Interpublic Group of is 1.41 times less risky than SohuCom. It trades about 0.01 of its potential returns per unit of risk. SohuCom is currently generating about -0.01 per unit of risk. If you would invest 3,042 in Interpublic Group of on January 26, 2024 and sell it today you would earn a total of 98.00 from holding Interpublic Group of or generate 3.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Interpublic Group of vs. SohuCom
Performance |
Timeline |
Interpublic Group |
SohuCom |
Interpublic Group and SohuCom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Interpublic Group and SohuCom
The main advantage of trading using opposite Interpublic Group and SohuCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interpublic Group position performs unexpectedly, SohuCom 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 SohuCom will offset losses from the drop in SohuCom's long position.Interpublic Group vs. Townsquare Media | Interpublic Group vs. Dolphin Entertainment | Interpublic Group vs. MGO Global Common |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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