Correlation Between CyberAgent and Omnicom

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

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

Diversification Opportunities for CyberAgent and Omnicom

-0.46

Correlation Coefficient

CyberAgent  Omnicom

Very good diversification

The 3 months correlation between CyberAgent and Omnicom is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CyberAgent and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and CyberAgent 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 CyberAgent 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 CyberAgent i.e., CyberAgent and Omnicom go up and down completely randomly.

Pair Corralation between CyberAgent and Omnicom

Assuming the 90 days horizon CyberAgent is expected to under-perform the Omnicom. In addition to that, CyberAgent is 1.7 times more volatile than Omnicom Group. It trades about 0.0 of its total potential returns per unit of risk. Omnicom Group is currently generating about 0.03 per unit of volatility. If you would invest  7,233  in Omnicom Group on September 24, 2024 and sell it today you would earn a total of  1,147  from holding Omnicom Group or generate 15.86% return on investment over 90 days.

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

CyberAgent  vs.  Omnicom Group

CyberAgent

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CyberAgent are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CyberAgent is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. Despite nearly stable basic indicators, Omnicom is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CyberAgent and Omnicom

The main advantage of trading using opposite CyberAgent and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CyberAgent 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 CyberAgent 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.