Correlation Between Publicis Groupe and Dynatrace Holdings

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

Diversification Opportunities for Publicis Groupe and Dynatrace Holdings

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Publicis and Dynatrace is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Publicis Groupe SA and Dynatrace Holdings LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynatrace Holdings LLC and Publicis Groupe 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 Publicis Groupe SA are associated (or correlated) with Dynatrace Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynatrace Holdings LLC has no effect on the direction of Publicis Groupe i.e., Publicis Groupe and Dynatrace Holdings go up and down completely randomly.

Pair Corralation between Publicis Groupe and Dynatrace Holdings

Assuming the 90 days horizon Publicis Groupe SA is expected to generate 1.14 times more return on investment than Dynatrace Holdings. However, Publicis Groupe is 1.14 times more volatile than Dynatrace Holdings LLC. It trades about 0.04 of its potential returns per unit of risk. Dynatrace Holdings LLC is currently generating about 0.01 per unit of risk. If you would invest  4,459  in Publicis Groupe SA on September 6, 2022 and sell it today you would earn a total of  2,181  from holding Publicis Groupe SA or generate 48.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Publicis Groupe SA  vs.  Dynatrace Holdings LLC

 Performance (%) 
       Timeline  
Publicis Groupe SA 
Publicis Performance
18 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Publicis Groupe SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Publicis Groupe exhibited solid returns over the last few months and may actually be approaching a breakup point.

Publicis Price Channel

Dynatrace Holdings LLC 
Dynatrace Performance
0 of 100
Over the last 90 days Dynatrace Holdings LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dynatrace Holdings is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Dynatrace Price Channel

Publicis Groupe and Dynatrace Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Publicis Groupe and Dynatrace Holdings

The main advantage of trading using opposite Publicis Groupe and Dynatrace Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Publicis Groupe position performs unexpectedly, Dynatrace Holdings 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 Dynatrace Holdings will offset losses from the drop in Dynatrace Holdings' long position.
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The idea behind Publicis Groupe SA and Dynatrace Holdings LLC 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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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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