Correlation Between Omnicom and Adaptive

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

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

Diversification Opportunities for Omnicom and Adaptive

-0.54

Correlation Coefficient

Omnicom  Adaptive

Excellent diversification

The 3 months correlation between Omnicom and Adaptive is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Omnicom Group and Adaptive Ad Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Ad Systems 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 Adaptive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Ad Systems has no effect on the direction of Omnicom i.e., Omnicom and Adaptive go up and down completely randomly.

Pair Corralation between Omnicom and Adaptive

If you would invest  9,308  in Omnicom Group on February 7, 2024 and sell it today you would earn a total of  11.00  from holding Omnicom Group or generate 0.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

Omnicom Group  vs.  Adaptive Ad Systems

Omnicom Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Omnicom Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Omnicom may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Adaptive Ad Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adaptive Ad Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Omnicom and Adaptive

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

The idea behind Omnicom Group and Adaptive Ad Systems 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..