Correlation Between EQ and Omnicom
Can any of the company-specific risk be diversified away by investing in both EQ 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 EQ and Omnicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQ Inc and Omnicom Group, you can compare the effects of market volatilities on EQ 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 EQ with a short position of Omnicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQ and Omnicom.
Diversification Opportunities for EQ and Omnicom
Pay attention - limited upside
The 3 months correlation between EQ and Omnicom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EQ Inc and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and EQ 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 EQ Inc 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 EQ i.e., EQ and Omnicom go up and down completely randomly.
Pair Corralation between EQ and Omnicom
If you would invest 7,098 in Omnicom Group on August 30, 2024 and sell it today you would earn a total of 3,337 from holding Omnicom Group or generate 47.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 29.23% |
| Values | Daily Returns |
EQ Inc vs. Omnicom Group
Performance |
| Timeline |
| EQ Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Omnicom Group |
EQ and Omnicom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQ and Omnicom
The main advantage of trading using opposite EQ and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQ 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.The idea behind EQ Inc and Omnicom 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.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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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