Correlation Between Spirent Communications and Omnicom
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Omnicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Omnicom Group, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Omnicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Omnicom.
Diversification Opportunities for Spirent Communications and Omnicom
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Spirent and Omnicom is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Omnicom go up and down completely randomly.
Pair Corralation between Spirent Communications and Omnicom
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 2.35 times more return on investment than Omnicom. However, Spirent Communications is 2.35 times more volatile than Omnicom Group. It trades about 0.05 of its potential returns per unit of risk. Omnicom Group is currently generating about 0.0 per unit of risk. If you would invest 10,860 in Spirent Communications plc on January 20, 2025 and sell it today you would earn a total of 6,560 from holding Spirent Communications plc or generate 60.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.31% |
| Values | Daily Returns |
Spirent Communications plc vs. Omnicom Group
Performance |
| Timeline |
| Spirent Communications |
| Omnicom Group |
Spirent Communications and Omnicom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Omnicom
The main advantage of trading using opposite Spirent Communications and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. Hochschild Mining plc | Spirent Communications vs. iShares Physical Silver | Spirent Communications vs. Cars Inc | Spirent Communications vs. Eastinco Mining Exploration |
| Omnicom vs. Aptitude Software Group | Omnicom vs. Bigblu Broadband PLC | Omnicom vs. Symphony Environmental Technologies | Omnicom vs. Zegona Communications Plc |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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