Correlation Between Omnicom and SPORTING

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

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

Diversification Opportunities for Omnicom and SPORTING

0.43

Correlation Coefficient

Omnicom  SPORTING

Very weak diversification

The 3 months correlation between Omnicom and SPORTING is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Omnicom Group and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Omnicom i.e., Omnicom and SPORTING go up and down completely randomly.

Pair Corralation between Omnicom and SPORTING

Assuming the 90 days horizon Omnicom Group is expected to generate 0.49 times more return on investment than SPORTING. However, Omnicom Group is 2.04 times less risky than SPORTING. It trades about 0.03 of its potential returns per unit of risk. SPORTING is currently generating about -0.03 per unit of risk. If you would invest  7,970  in Omnicom Group on September 30, 2024 and sell it today you would earn a total of  376.00  from holding Omnicom Group or generate 4.72% return on investment over 90 days.

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

Omnicom Group  vs.  SPORTING

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SPORTING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORTING 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Omnicom and SPORTING

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

The idea behind Omnicom Group and SPORTING 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.