Correlation Between Digital Media and Interpublic

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Can any of the company-specific risk be diversified away by investing in both Digital Media and Interpublic 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 Digital Media and Interpublic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Media Solutions and Interpublic Group, you can compare the effects of market volatilities on Digital Media and Interpublic 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 Digital Media with a short position of Interpublic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Media and Interpublic.

Diversification Opportunities for Digital Media and Interpublic

  Correlation Coefficient

Good diversification

The 3 months correlation between Digital and Interpublic is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Digital Media Solutions and Interpublic Group Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interpublic Group and Digital Media 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 Digital Media Solutions are associated (or correlated) with Interpublic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interpublic Group has no effect on the direction of Digital Media i.e., Digital Media and Interpublic go up and down completely randomly.

Pair Corralation between Digital Media and Interpublic

Considering the 90-day investment horizon Digital Media Solutions is expected to generate 9.41 times more return on investment than Interpublic. However, Digital Media is 9.41 times more volatile than Interpublic Group. It trades about 0.11 of its potential returns per unit of risk. Interpublic Group is currently generating about -0.15 per unit of risk. If you would invest  138.00  in Digital Media Solutions on July 1, 2022 and sell it today you would earn a total of  51.00  from holding Digital Media Solutions or generate 36.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Digital Media Solutions  vs.  Interpublic Group Of

 Performance (%) 
Digital Media Solutions 
Digital Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Digital Media Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting primary indicators, Digital Media reported solid returns over the last few months and may actually be approaching a breakup point.

Digital Price Channel

Interpublic Group 
Interpublic Performance
0 of 100
Over the last 90 days Interpublic Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Interpublic is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Interpublic Price Channel

Digital Media and Interpublic Volatility Contrast

   Predicted Return Density   

Pair Trading with Digital Media and Interpublic

The main advantage of trading using opposite Digital Media and Interpublic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Media position performs unexpectedly, Interpublic 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 Interpublic will offset losses from the drop in Interpublic's long position.
Digital Media vs. Amazon Inc
The idea behind Digital Media Solutions and Interpublic Group 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.
Interpublic vs. Amazon Inc
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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