Correlation Between CleanTech Lithium and Omnicom
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium 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 CleanTech Lithium and Omnicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CleanTech Lithium plc and Omnicom Group, you can compare the effects of market volatilities on CleanTech Lithium 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 CleanTech Lithium with a short position of Omnicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Omnicom.
Diversification Opportunities for CleanTech Lithium and Omnicom
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between CleanTech and Omnicom is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and CleanTech Lithium 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 CleanTech Lithium plc 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 CleanTech Lithium i.e., CleanTech Lithium and Omnicom go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Omnicom
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to generate 1.12 times more return on investment than Omnicom. However, CleanTech Lithium is 1.12 times more volatile than Omnicom Group. It trades about -0.01 of its potential returns per unit of risk. Omnicom Group is currently generating about -0.17 per unit of risk. If you would invest 1,850 in CleanTech Lithium plc on September 13, 2024 and sell it today you would lose (25.00) from holding CleanTech Lithium plc or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Omnicom Group
Performance |
| Timeline |
| CleanTech Lithium plc |
| Omnicom Group |
CleanTech Lithium and Omnicom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Omnicom
The main advantage of trading using opposite CleanTech Lithium and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium 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.| CleanTech Lithium vs. Kinnevik Investment AB | CleanTech Lithium vs. Bloomsbury Publishing Plc | CleanTech Lithium vs. New Residential Investment | CleanTech Lithium vs. Monks Investment Trust |
| Omnicom vs. Herald Investment Trust | Omnicom vs. Impax Environmental Markets | Omnicom vs. Schroders Investment Trusts | Omnicom vs. Monks Investment Trust |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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