Correlation Between Aquagold International and Omnicom

Can any of the company-specific risk be diversified away by investing in both Aquagold International 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 Aquagold International and Omnicom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Omnicom Group, you can compare the effects of market volatilities on Aquagold International 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 Aquagold International with a short position of Omnicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Omnicom.

Diversification Opportunities for Aquagold International and Omnicom

0.5

Correlation Coefficient

Aquagold International  Omnicom

Very weak diversification

The 3 months correlation between Aquagold and Omnicom is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and Omnicom go up and down completely randomly.

Pair Corralation between Aquagold International and Omnicom

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Omnicom. In addition to that, Aquagold International is 8.46 times more volatile than Omnicom Group. It trades about -0.22 of its total potential returns per unit of risk. Omnicom Group is currently generating about -0.34 per unit of volatility. If you would invest  10,399  in Omnicom Group on September 29, 2024 and sell it today you would lose (1,656) from holding Omnicom Group or give up 15.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Omnicom Group

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Omnicom Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omnicom Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aquagold International and Omnicom

The main advantage of trading using opposite Aquagold International and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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.

The idea behind Aquagold International and Omnicom Group 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.