Correlation Between Honest and Omnicom
Can any of the company-specific risk be diversified away by investing in both Honest 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 Honest and Omnicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honest Company and Omnicom Group, you can compare the effects of market volatilities on Honest 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 Honest with a short position of Omnicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honest and Omnicom.
Diversification Opportunities for Honest and Omnicom
Poor diversification
The 3 months correlation between Honest and Omnicom is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Honest Company and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Honest 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 Honest Company 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 Honest i.e., Honest and Omnicom go up and down completely randomly.
Pair Corralation between Honest and Omnicom
Given the investment horizon of 90 days Honest Company is expected to generate 4.34 times more return on investment than Omnicom. However, Honest is 4.34 times more volatile than Omnicom Group. It trades about 0.1 of its potential returns per unit of risk. Omnicom Group is currently generating about 0.08 per unit of risk. If you would invest 149.00 in Honest Company on January 24, 2024 and sell it today you would earn a total of 154.00 from holding Honest Company or generate 103.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Honest Company vs. Omnicom Group
Performance |
Timeline |
Honest Company |
Omnicom Group |
Honest and Omnicom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Honest and Omnicom
The main advantage of trading using opposite Honest and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honest 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.Honest vs. Procter Gamble | Honest vs. Colgate Palmolive | Honest vs. Hims Hers Health | Honest vs. European Wax Center |
Omnicom vs. MGO Global Common | Omnicom vs. Baosheng Media Group | Omnicom vs. Glory Star New | Omnicom vs. Impact Fusion International |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Transaction History View history of all your transactions and understand their impact on performance |