Correlation Between Omnicom and Dentsu
Can any of the company-specific risk be diversified away by investing in both Omnicom and Dentsu 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 Dentsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omnicom Group and Dentsu Inc, you can compare the effects of market volatilities on Omnicom and Dentsu 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 Dentsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omnicom and Dentsu.
Diversification Opportunities for Omnicom and Dentsu
Very good diversification
The 3 months correlation between Omnicom and Dentsu is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Omnicom Group and Dentsu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsu Inc 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 Dentsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsu Inc has no effect on the direction of Omnicom i.e., Omnicom and Dentsu go up and down completely randomly.
Pair Corralation between Omnicom and Dentsu
Considering the 90-day investment horizon Omnicom Group is expected to generate 0.33 times more return on investment than Dentsu. However, Omnicom Group is 3.03 times less risky than Dentsu. It trades about 0.09 of its potential returns per unit of risk. Dentsu Inc is currently generating about -0.09 per unit of risk. If you would invest 10,108 in Omnicom Group on September 2, 2024 and sell it today you would earn a total of 374.00 from holding Omnicom Group or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 19.05% |
| Values | Daily Returns |
Omnicom Group vs. Dentsu Inc
Performance |
| Timeline |
| Omnicom Group |
| Dentsu Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Omnicom and Dentsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omnicom and Dentsu
The main advantage of trading using opposite Omnicom and Dentsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omnicom position performs unexpectedly, Dentsu 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 Dentsu will offset losses from the drop in Dentsu's long position.The idea behind Omnicom Group and Dentsu Inc 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.| Dentsu vs. Beyond Commerce | Dentsu vs. Baosheng Media Group | Dentsu vs. MGO Global Common | Dentsu vs. CMG Holdings Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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