Correlation Between Omnicom and Publicis Groupe

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

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

Diversification Opportunities for Omnicom and Publicis Groupe

-0.21

Correlation Coefficient

Omnicom  Publicis Groupe

Very good diversification

The 3 months correlation between Omnicom and Publicis is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Omnicom Group and Publicis Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Publicis Groupe SA 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 Publicis Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Publicis Groupe SA has no effect on the direction of Omnicom i.e., Omnicom and Publicis Groupe go up and down completely randomly.

Pair Corralation between Omnicom and Publicis Groupe

Assuming the 90 days horizon Omnicom Group is expected to under-perform the Publicis Groupe. In addition to that, Omnicom is 1.31 times more volatile than Publicis Groupe SA. It trades about -0.36 of its total potential returns per unit of risk. Publicis Groupe SA is currently generating about -0.02 per unit of volatility. If you would invest  10,315  in Publicis Groupe SA on September 24, 2024 and sell it today you would lose (75.00) from holding Publicis Groupe SA or give up 0.73% of portfolio value over 90 days.

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

Omnicom Group  vs.  Publicis Groupe SA

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.

Publicis Groupe SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Publicis Groupe SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Publicis Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Omnicom and Publicis Groupe

The main advantage of trading using opposite Omnicom and Publicis Groupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omnicom position performs unexpectedly, Publicis Groupe 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 Publicis Groupe will offset losses from the drop in Publicis Groupe's long position.

The idea behind Omnicom Group and Publicis Groupe SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.