Correlation Between Snipp Interactive and WPP Plc

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

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

Diversification Opportunities for Snipp Interactive and WPP Plc

-0.26

Correlation Coefficient

Snipp Interactive  WPP Plc

Very good diversification

The 3 months correlation between Snipp and WPP is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Snipp Interactive and WPP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP plc and Snipp Interactive 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 Snipp Interactive are associated (or correlated) with WPP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP plc has no effect on the direction of Snipp Interactive i.e., Snipp Interactive and WPP Plc go up and down completely randomly.

Pair Corralation between Snipp Interactive and WPP Plc

Assuming the 90 days horizon Snipp Interactive is expected to under-perform the WPP Plc. In addition to that, Snipp Interactive is 1.02 times more volatile than WPP plc. It trades about -0.3 of its total potential returns per unit of risk. WPP plc is currently generating about 0.09 per unit of volatility. If you would invest  998.00  in WPP plc on March 7, 2024 and sell it today you would earn a total of  60.00  from holding WPP plc or generate 6.01% return on investment over 90 days.

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

Snipp Interactive  vs.  WPP plc

Snipp Interactive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snipp Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

WPP plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WPP plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, WPP Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Snipp Interactive and WPP Plc

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

The idea behind Snipp Interactive and WPP plc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.