Correlation Between Sirius XM and Omnicom

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

Diversification Opportunities for Sirius XM and Omnicom

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Sirius and Omnicom is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sirius XM Holdings and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Sirius XM 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 Sirius XM Holdings 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 Sirius XM i.e., Sirius XM and Omnicom go up and down completely randomly.

Pair Corralation between Sirius XM and Omnicom

Given the investment horizon of 90 days Sirius XM is expected to generate 36.46 times less return on investment than Omnicom. But when comparing it to its historical volatility, Sirius XM Holdings is 1.11 times less risky than Omnicom. It trades about 0.01 of its potential returns per unit of risk. Omnicom Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  7,006  in Omnicom Group on May 21, 2022 and sell it today you would earn a total of  316.00  from holding Omnicom Group or generate 4.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Sirius XM Holdings  vs.  Omnicom Group

 Performance (%) 
       Timeline  
Sirius XM Holdings 
Sirius Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Sirius XM Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sirius XM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sirius Price Channel

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 and Omnicom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sirius XM and Omnicom

The main advantage of trading using opposite Sirius XM and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sirius XM 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 Sirius XM Holdings 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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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