Correlation Between ZW Data and Omnicom

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

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

Diversification Opportunities for ZW Data and Omnicom

0.47

Correlation Coefficient

ZW Data  Omnicom

Very weak diversification

The 3 months correlation between CNET and Omnicom is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ZW Data Action and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and ZW Data 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 ZW Data Action 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 ZW Data i.e., ZW Data and Omnicom go up and down completely randomly.

Pair Corralation between ZW Data and Omnicom

Given the investment horizon of 90 days ZW Data is expected to generate 1.92 times less return on investment than Omnicom. In addition to that, ZW Data is 2.73 times more volatile than Omnicom Group. It trades about 0.02 of its total potential returns per unit of risk. Omnicom Group is currently generating about 0.13 per unit of volatility. If you would invest  8,842  in Omnicom Group on January 25, 2024 and sell it today you would earn a total of  580.00  from holding Omnicom Group or generate 6.56% return on investment over 90 days.

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

ZW Data Action  vs.  Omnicom Group

ZW Data Action

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ZW Data Action are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, ZW Data unveiled solid returns over the last few months and may actually be approaching a breakup point.

Omnicom Group

Risk-Adjusted Performance

4 of 100

Insignificant

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ZW Data and Omnicom

The main advantage of trading using opposite ZW Data and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZW Data 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 ZW Data Action 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.