Correlation Between Publicis Groupe and Omnicom

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

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

Diversification Opportunities for Publicis Groupe and Omnicom

-0.3

Correlation Coefficient

Publicis Groupe  Omnicom

Very good diversification

The 3 months correlation between Publicis and Omnicom is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Publicis Groupe SA and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Publicis Groupe 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 Publicis Groupe SA 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 Publicis Groupe i.e., Publicis Groupe and Omnicom go up and down completely randomly.

Pair Corralation between Publicis Groupe and Omnicom

Assuming the 90 days horizon Publicis Groupe SA is expected to generate 0.76 times more return on investment than Omnicom. However, Publicis Groupe SA is 1.31 times less risky than Omnicom. It trades about -0.02 of its potential returns per unit of risk. Omnicom Group is currently generating about -0.39 per unit of risk. If you would invest  10,315  in Publicis Groupe SA on September 26, 2024 and sell it today you would lose (75.00) from holding Publicis Groupe SA or give up 0.73% of portfolio value over 90 days.

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

Publicis Groupe SA  vs.  Omnicom Group

Publicis Groupe SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Publicis Groupe SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Publicis Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Omnicom Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omnicom Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Publicis Groupe and Omnicom

The main advantage of trading using opposite Publicis Groupe and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Publicis Groupe 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 Publicis Groupe SA 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.