Correlation Between Interpublic and CyberAgent

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

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

Diversification Opportunities for Interpublic and CyberAgent

-0.48

Correlation Coefficient

Interpublic  CyberAgent

Very good diversification

The 3 months correlation between Interpublic and CyberAgent is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Interpublic Group and CyberAgent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent and Interpublic 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 The Interpublic Group are associated (or correlated) with CyberAgent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent has no effect on the direction of Interpublic i.e., Interpublic and CyberAgent go up and down completely randomly.

Pair Corralation between Interpublic and CyberAgent

Assuming the 90 days horizon Interpublic is expected to generate 3.77 times less return on investment than CyberAgent. But when comparing it to its historical volatility, The Interpublic Group is 1.2 times less risky than CyberAgent. It trades about 0.04 of its potential returns per unit of risk. CyberAgent is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  725.00  in CyberAgent on April 21, 2025 and sell it today you would earn a total of  160.00  from holding CyberAgent or generate 22.07% return on investment over 90 days.

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

The Interpublic Group  vs.  CyberAgent

Interpublic Group

Risk-Adjusted Performance

Insignificant

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

CyberAgent

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CyberAgent are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CyberAgent reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Interpublic and CyberAgent

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

The idea behind The Interpublic Group and CyberAgent 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.