Correlation Between Twitter and Omnicom

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

Diversification Opportunities for Twitter and Omnicom

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Twitter and Omnicom is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Twitter and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Twitter 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 Twitter 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 Twitter i.e., Twitter and Omnicom go up and down completely randomly.

Pair Corralation between Twitter and Omnicom

Given the investment horizon of 90 days Twitter is expected to generate 0.95 times more return on investment than Omnicom. However, Twitter is 1.06 times less risky than Omnicom. It trades about 0.0 of its potential returns per unit of risk. Omnicom Group is currently generating about -0.26 per unit of risk. If you would invest  3,952  in Twitter on March 27, 2022 and sell it today you would lose (11.00)  from holding Twitter or give up 0.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Twitter  vs.  Omnicom Group

 Performance (%) 
      Timeline 
Twitter 
Twitter Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Twitter are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Twitter may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Twitter 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 weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Omnicom Price Channel

Twitter and Omnicom Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Twitter and Omnicom

The main advantage of trading using opposite Twitter and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twitter 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 Twitter 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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