Correlation Between American Growth and Omni Small
Can any of the company-specific risk be diversified away by investing in both American Growth and Omni Small 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 American Growth and Omni Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Growth Fund and Omni Small Cap Value, you can compare the effects of market volatilities on American Growth and Omni Small 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 American Growth with a short position of Omni Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Growth and Omni Small.
Diversification Opportunities for American Growth and Omni Small
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Omni is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding American Growth Fund and Omni Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omni Small Cap and American Growth 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 American Growth Fund are associated (or correlated) with Omni Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omni Small Cap has no effect on the direction of American Growth i.e., American Growth and Omni Small go up and down completely randomly.
Pair Corralation between American Growth and Omni Small
Assuming the 90 days horizon American Growth Fund is expected to under-perform the Omni Small. In addition to that, American Growth is 2.89 times more volatile than Omni Small Cap Value. It trades about -0.2 of its total potential returns per unit of risk. Omni Small Cap Value is currently generating about -0.06 per unit of volatility. If you would invest 2,144 in Omni Small Cap Value on September 12, 2024 and sell it today you would lose (24.00) from holding Omni Small Cap Value or give up 1.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Growth Fund vs. Omni Small Cap Value
Performance |
| Timeline |
| American Growth |
| Omni Small Cap |
American Growth and Omni Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Growth and Omni Small
The main advantage of trading using opposite American Growth and Omni Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Growth position performs unexpectedly, Omni Small 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 Omni Small will offset losses from the drop in Omni Small's long position.| American Growth vs. Prudential High Yield | American Growth vs. Msift High Yield | American Growth vs. T Rowe Price | American Growth vs. Payden High Income |
| Omni Small vs. Davenport Small Cap | Omni Small vs. Lord Abbett Diversified | Omni Small vs. Jhancock Diversified Macro | Omni Small vs. Pioneer Diversified High |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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