Correlation Between Omnicom and Sirius XM

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Can any of the company-specific risk be diversified away by investing in both Omnicom and Sirius XM 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 Sirius XM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omnicom Group and Sirius XM Holdings, you can compare the effects of market volatilities on Omnicom and Sirius XM 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 Sirius XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omnicom and Sirius XM.

Diversification Opportunities for Omnicom and Sirius XM

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Omnicom and Sirius is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Omnicom Group and Sirius XM Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holdings 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 Sirius XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holdings has no effect on the direction of Omnicom i.e., Omnicom and Sirius XM go up and down completely randomly.

Pair Corralation between Omnicom and Sirius XM

Considering the 90-day investment horizon Omnicom Group is expected to under-perform the Sirius XM. In addition to that, Omnicom is 1.24 times more volatile than Sirius XM Holdings. It trades about -0.08 of its total potential returns per unit of risk. Sirius XM Holdings is currently generating about -0.06 per unit of volatility. If you would invest  600.00  in Sirius XM Holdings on July 6, 2022 and sell it today you would lose (14.00)  from holding Sirius XM Holdings or give up 2.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Omnicom Group  vs.  Sirius XM Holdings

 Performance (%) 
       Timeline  
Omnicom Group 
Omnicom Performance
0 of 100
Over the last 90 days Omnicom Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Omnicom is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Omnicom Price Channel

Sirius XM Holdings 
Sirius Performance
0 of 100
Over the last 90 days Sirius XM Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sirius XM is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sirius Price Channel

Omnicom and Sirius XM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Omnicom and Sirius XM

The main advantage of trading using opposite Omnicom and Sirius XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omnicom position performs unexpectedly, Sirius XM 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 Sirius XM will offset losses from the drop in Sirius XM's long position.
Omnicom vs. Amazon Inc
The idea behind Omnicom Group and Sirius XM Holdings 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.
Sirius XM vs. Live Nation Entertainment
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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