Correlation Between Boston Omaha and Omnicom

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

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

Diversification Opportunities for Boston Omaha and Omnicom

0.11

Correlation Coefficient

Boston Omaha  Omnicom

Average diversification

The 3 months correlation between Boston and Omnicom is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Boston Omaha Corp and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Boston Omaha 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 Boston Omaha Corp 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 Boston Omaha i.e., Boston Omaha and Omnicom go up and down completely randomly.

Pair Corralation between Boston Omaha and Omnicom

Considering the 90-day investment horizon Boston Omaha Corp is expected to generate 0.8 times more return on investment than Omnicom. However, Boston Omaha Corp is 1.25 times less risky than Omnicom. It trades about 0.02 of its potential returns per unit of risk. Omnicom Group is currently generating about -0.07 per unit of risk. If you would invest  1,470  in Boston Omaha Corp on September 17, 2024 and sell it today you would earn a total of  19.50  from holding Boston Omaha Corp or generate 1.33% return on investment over 90 days.

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

Boston Omaha Corp  vs.  Omnicom Group

Boston Omaha Corp

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Omaha Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Boston Omaha is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 latest uncertain performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Boston Omaha and Omnicom

The main advantage of trading using opposite Boston Omaha and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Omaha 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 Boston Omaha Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.