Correlation Between Canadian Natural and Omnicom
Can any of the company-specific risk be diversified away by investing in both Canadian Natural and Omnicom 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 Canadian Natural and Omnicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Natural Resources and Omnicom Group, you can compare the effects of market volatilities on Canadian Natural and Omnicom 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 Canadian Natural with a short position of Omnicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and Omnicom.
Diversification Opportunities for Canadian Natural and Omnicom
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and Omnicom is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Canadian Natural 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 Canadian Natural Resources are associated (or correlated) with Omnicom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnicom Group has no effect on the direction of Canadian Natural i.e., Canadian Natural and Omnicom go up and down completely randomly.
Pair Corralation between Canadian Natural and Omnicom
Considering the 90-day investment horizon Canadian Natural is expected to generate 1.05 times less return on investment than Omnicom. In addition to that, Canadian Natural is 1.29 times more volatile than Omnicom Group. It trades about 0.04 of its total potential returns per unit of risk. Omnicom Group is currently generating about 0.05 per unit of volatility. If you would invest 7,594 in Omnicom Group on September 3, 2024 and sell it today you would earn a total of 2,888 from holding Omnicom Group or generate 38.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Natural Resources vs. Omnicom Group
Performance |
| Timeline |
| Canadian Natural Res |
| Omnicom Group |
Canadian Natural and Omnicom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and Omnicom
The main advantage of trading using opposite Canadian Natural and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural position performs unexpectedly, Omnicom 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 Omnicom will offset losses from the drop in Omnicom's long position.| Canadian Natural vs. Baytex Energy Corp | Canadian Natural vs. Vermilion Energy | Canadian Natural vs. Obsidian Energy | Canadian Natural vs. Ovintiv |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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