Correlation Between Omnicom and JCDecaux
Can any of the company-specific risk be diversified away by investing in both Omnicom and JCDecaux 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 JCDecaux into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omnicom Group and JCDecaux SA, you can compare the effects of market volatilities on Omnicom and JCDecaux 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 JCDecaux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omnicom and JCDecaux.
Diversification Opportunities for Omnicom and JCDecaux
Modest diversification
The 3 months correlation between Omnicom and JCDecaux is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Omnicom Group and JCDecaux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCDecaux SA 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 JCDecaux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCDecaux SA has no effect on the direction of Omnicom i.e., Omnicom and JCDecaux go up and down completely randomly.
Pair Corralation between Omnicom and JCDecaux
Considering the 90-day investment horizon Omnicom Group is expected to generate 0.63 times more return on investment than JCDecaux. However, Omnicom Group is 1.58 times less risky than JCDecaux. It trades about 0.02 of its potential returns per unit of risk. JCDecaux SA is currently generating about -0.04 per unit of risk. If you would invest 8,376 in Omnicom Group on November 3, 2024 and sell it today you would earn a total of 303.00 from holding Omnicom Group or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Omnicom Group vs. JCDecaux SA
Performance |
| Timeline |
| Omnicom Group |
| JCDecaux SA |
Omnicom and JCDecaux Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omnicom and JCDecaux
The main advantage of trading using opposite Omnicom and JCDecaux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omnicom position performs unexpectedly, JCDecaux 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 JCDecaux will offset losses from the drop in JCDecaux's long position.The idea behind Omnicom Group and JCDecaux SA 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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