Correlation Between Omnicom and Cimpress

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

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

Diversification Opportunities for Omnicom and Cimpress

-0.37

Correlation Coefficient

Omnicom  Cimpress

Very good diversification

The 3 months correlation between Omnicom and Cimpress is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Omnicom Group and Cimpress NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimpress NV 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 Cimpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimpress NV has no effect on the direction of Omnicom i.e., Omnicom and Cimpress go up and down completely randomly.

Pair Corralation between Omnicom and Cimpress

Considering the 90-day investment horizon Omnicom Group is expected to generate 0.54 times more return on investment than Cimpress. However, Omnicom Group is 1.86 times less risky than Cimpress. It trades about 0.06 of its potential returns per unit of risk. Cimpress NV is currently generating about -0.11 per unit of risk. If you would invest  9,975  in Omnicom Group on August 30, 2024 and sell it today you would earn a total of  460.00  from holding Omnicom Group or generate 4.61% return on investment over 90 days.

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

Omnicom Group  vs.  Cimpress NV

Omnicom Group

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Omnicom Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Omnicom is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Omnicom and Cimpress

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

The idea behind Omnicom Group and Cimpress NV 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.