Correlation Between OMNICOM and Dine Brands

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

By analyzing existing cross correlation between OMNICOM GROUP INC and Dine Brands Global, you can compare the effects of market volatilities on OMNICOM and Dine Brands 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 Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of OMNICOM and Dine Brands.

Diversification Opportunities for OMNICOM and Dine Brands

-0.05

Correlation Coefficient

OMNICOM  Dine Brands

Good diversification

The 3 months correlation between OMNICOM and Dine is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding OMNICOM GROUP INC and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global 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 INC are associated (or correlated) with Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of OMNICOM i.e., OMNICOM and Dine Brands go up and down completely randomly.

Pair Corralation between OMNICOM and Dine Brands

Assuming the 90 days trading horizon OMNICOM GROUP INC is expected to generate 0.35 times more return on investment than Dine Brands. However, OMNICOM GROUP INC is 2.86 times less risky than Dine Brands. It trades about -0.22 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.14 per unit of risk. If you would invest  9,857  in OMNICOM GROUP INC on September 17, 2024 and sell it today you would lose (376.00) from holding OMNICOM GROUP INC or give up 3.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

OMNICOM GROUP INC  vs.  Dine Brands Global

OMNICOM GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OMNICOM GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, OMNICOM is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Dine Brands Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dine Brands Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Dine Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with OMNICOM and Dine Brands

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

The idea behind OMNICOM GROUP INC and Dine Brands Global 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.