Correlation Between Omnicom and STRAN PANY
Can any of the company-specific risk be diversified away by investing in both Omnicom and STRAN PANY 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 STRAN PANY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omnicom Group and STRAN PANY INC, you can compare the effects of market volatilities on Omnicom and STRAN PANY 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 STRAN PANY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omnicom and STRAN PANY.
Diversification Opportunities for Omnicom and STRAN PANY
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Omnicom and STRAN is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Omnicom Group and STRAN PANY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAN PANY 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 STRAN PANY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAN PANY INC has no effect on the direction of Omnicom i.e., Omnicom and STRAN PANY go up and down completely randomly.
Pair Corralation between Omnicom and STRAN PANY
Considering the 90-day investment horizon Omnicom is expected to generate 16.0 times less return on investment than STRAN PANY. But when comparing it to its historical volatility, Omnicom Group is 19.18 times less risky than STRAN PANY. It trades about 0.09 of its potential returns per unit of risk. STRAN PANY INC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3.14 in STRAN PANY INC on September 5, 2024 and sell it today you would lose (0.14) from holding STRAN PANY INC or give up 4.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 5.6% |
| Values | Daily Returns |
Omnicom Group vs. STRAN PANY INC
Performance |
| Timeline |
| Omnicom Group |
| STRAN PANY INC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Omnicom and STRAN PANY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omnicom and STRAN PANY
The main advantage of trading using opposite Omnicom and STRAN PANY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omnicom position performs unexpectedly, STRAN PANY 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 STRAN PANY will offset losses from the drop in STRAN PANY's long position.The idea behind Omnicom Group and STRAN PANY 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.| STRAN PANY vs. Innovid Corp | STRAN PANY vs. Interpublic Group of | STRAN PANY vs. Cimpress NV | STRAN PANY vs. Omnicom 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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