Correlation Between Interpublic Group and MGO Global

Can any of the company-specific risk be diversified away by investing in both Interpublic Group and MGO Global 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 MGO Global 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 MGO Global Common, you can compare the effects of market volatilities on Interpublic Group and MGO Global 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 MGO Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interpublic Group and MGO Global.

Diversification Opportunities for Interpublic Group and MGO Global

0.72

Correlation Coefficient

Interpublic Group  MGO Global

Poor diversification

The 3 months correlation between Interpublic and MGO is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and MGO Global Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGO Global Common 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 MGO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGO Global Common has no effect on the direction of Interpublic Group i.e., Interpublic Group and MGO Global go up and down completely randomly.

Pair Corralation between Interpublic Group and MGO Global

Considering the 90-day investment horizon Interpublic Group of is expected to generate 0.2 times more return on investment than MGO Global. However, Interpublic Group of is 5.09 times less risky than MGO Global. It trades about -0.07 of its potential returns per unit of risk. MGO Global Common is currently generating about -0.11 per unit of risk. If you would invest  3,147  in Interpublic Group of on February 6, 2024 and sell it today you would lose (59.00) from holding Interpublic Group of or give up 1.87% of portfolio value over 90 days.

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

Interpublic Group of  vs.  MGO Global Common

Interpublic Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interpublic Group of has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

MGO Global Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGO Global Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Interpublic Group and MGO Global

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

The idea behind Interpublic Group of and MGO Global Common 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.