Correlation Between Cognex and Omnicom

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

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

Diversification Opportunities for Cognex and Omnicom

-0.04

Correlation Coefficient

Cognex  Omnicom

Good diversification

The 3 months correlation between Cognex and Omnicom is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Cognex 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 Cognex 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 Cognex i.e., Cognex and Omnicom go up and down completely randomly.

Pair Corralation between Cognex and Omnicom

Given the investment horizon of 90 days Cognex is expected to generate 1.63 times more return on investment than Omnicom. However, Cognex is 1.63 times more volatile than Omnicom Group. It trades about 0.2 of its potential returns per unit of risk. Omnicom Group is currently generating about -0.05 per unit of risk. If you would invest  2,792  in Cognex on May 5, 2025 and sell it today you would earn a total of  1,255  from holding Cognex or generate 44.95% return on investment over 90 days.

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

Cognex  vs.  Omnicom Group

Cognex

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cognex are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Cognex showed solid returns over the last few months and may actually be approaching a breakup point.

Omnicom Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Omnicom Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Omnicom is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cognex and Omnicom

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