Correlation Between Omnicom and Indutrade
Can any of the company-specific risk be diversified away by investing in both Omnicom and Indutrade 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 Omnicom and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omnicom Group and Indutrade AB, you can compare the effects of market volatilities on Omnicom and Indutrade 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 Omnicom with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omnicom and Indutrade.
Diversification Opportunities for Omnicom and Indutrade
Average diversification
The 3 months correlation between Omnicom and Indutrade is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Omnicom Group and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Omnicom 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 Omnicom Group are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Omnicom i.e., Omnicom and Indutrade go up and down completely randomly.
Pair Corralation between Omnicom and Indutrade
Assuming the 90 days trading horizon Omnicom is expected to generate 1.63 times less return on investment than Indutrade. But when comparing it to its historical volatility, Omnicom Group is 1.17 times less risky than Indutrade. It trades about 0.04 of its potential returns per unit of risk. Indutrade AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 22,207 in Indutrade AB on September 15, 2024 and sell it today you would earn a total of 6,153 from holding Indutrade AB or generate 27.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Omnicom Group vs. Indutrade AB
Performance |
| Timeline |
| Omnicom Group |
| Indutrade AB |
Omnicom and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omnicom and Indutrade
The main advantage of trading using opposite Omnicom and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omnicom position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| Omnicom vs. Indutrade AB | Omnicom vs. Zegona Communications Plc | Omnicom vs. Komercni Banka | Omnicom vs. Verizon Communications |
| Indutrade vs. Samsung Electronics Co | Indutrade vs. Samsung Electronics Co | Indutrade vs. Hyundai Motor | Indutrade vs. Reliance Industries Ltd |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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