Correlation Between Interpublic Group and Omnicom
Can any of the company-specific risk be diversified away by investing in both Interpublic Group 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 Interpublic Group and Omnicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interpublic Group of and Omnicom Group, you can compare the effects of market volatilities on Interpublic Group 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 Interpublic Group with a short position of Omnicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interpublic Group and Omnicom.
Diversification Opportunities for Interpublic Group and Omnicom
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Interpublic and Omnicom is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Interpublic Group 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 Interpublic Group of 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 Interpublic Group i.e., Interpublic Group and Omnicom go up and down completely randomly.
Pair Corralation between Interpublic Group and Omnicom
Considering the 90-day investment horizon Interpublic Group of is expected to under-perform the Omnicom. In addition to that, Interpublic Group is 1.14 times more volatile than Omnicom Group. It trades about -0.03 of its total potential returns per unit of risk. Omnicom Group is currently generating about 0.04 per unit of volatility. If you would invest 10,267 in Omnicom Group on August 28, 2024 and sell it today you would earn a total of 193.00 from holding Omnicom Group or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Interpublic Group of vs. Omnicom Group
Performance |
| Timeline |
| Interpublic Group |
| Omnicom Group |
Interpublic Group and Omnicom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interpublic Group and Omnicom
The main advantage of trading using opposite Interpublic Group and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interpublic Group 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.| Interpublic Group vs. Ziff Davis | Interpublic Group vs. Criteo Sa | Interpublic Group vs. WPP PLC ADR | Interpublic Group vs. Integral Ad Science |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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