Correlation Between Omnicom and Direct Digital
Can any of the company-specific risk be diversified away by investing in both Omnicom and Direct Digital 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 Direct Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omnicom Group and Direct Digital Holdings, you can compare the effects of market volatilities on Omnicom and Direct Digital 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 Direct Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omnicom and Direct Digital.
Diversification Opportunities for Omnicom and Direct Digital
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Omnicom and Direct is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Omnicom Group and Direct Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Digital Holdings 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 Direct Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Digital Holdings has no effect on the direction of Omnicom i.e., Omnicom and Direct Digital go up and down completely randomly.
Pair Corralation between Omnicom and Direct Digital
Considering the 90-day investment horizon Omnicom Group is expected to generate 0.22 times more return on investment than Direct Digital. However, Omnicom Group is 4.53 times less risky than Direct Digital. It trades about 0.01 of its potential returns per unit of risk. Direct Digital Holdings is currently generating about -0.36 per unit of risk. If you would invest 10,250 in Omnicom Group on August 27, 2024 and sell it today you would lose (12.00) from holding Omnicom Group or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omnicom Group vs. Direct Digital Holdings
Performance |
| Timeline |
| Omnicom Group |
| Direct Digital Holdings |
Omnicom and Direct Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omnicom and Direct Digital
The main advantage of trading using opposite Omnicom and Direct Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omnicom position performs unexpectedly, Direct Digital 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 Direct Digital will offset losses from the drop in Direct Digital's long position.The idea behind Omnicom Group and Direct Digital Holdings 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.| Direct Digital vs. ADTRAN Inc | Direct Digital vs. Belden Inc | Direct Digital vs. ADC Therapeutics SA | Direct Digital vs. Comtech Telecommunications Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |