Correlation Between Omni Small-cap and Americafirst Defensive
Can any of the company-specific risk be diversified away by investing in both Omni Small-cap and Americafirst Defensive 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 Omni Small-cap and Americafirst Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omni Small Cap Value and Americafirst Defensive Growth, you can compare the effects of market volatilities on Omni Small-cap and Americafirst Defensive 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 Omni Small-cap with a short position of Americafirst Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small-cap and Americafirst Defensive.
Diversification Opportunities for Omni Small-cap and Americafirst Defensive
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Omni and AMERICAFIRST is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Americafirst Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Defensive and Omni Small-cap 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 Omni Small Cap Value are associated (or correlated) with Americafirst Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Defensive has no effect on the direction of Omni Small-cap i.e., Omni Small-cap and Americafirst Defensive go up and down completely randomly.
Pair Corralation between Omni Small-cap and Americafirst Defensive
Assuming the 90 days horizon Omni Small Cap Value is expected to under-perform the Americafirst Defensive. In addition to that, Omni Small-cap is 4.94 times more volatile than Americafirst Defensive Growth. It trades about -0.03 of its total potential returns per unit of risk. Americafirst Defensive Growth is currently generating about 0.22 per unit of volatility. If you would invest 782.00 in Americafirst Defensive Growth on November 18, 2024 and sell it today you would earn a total of 7.00 from holding Americafirst Defensive Growth or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omni Small Cap Value vs. Americafirst Defensive Growth
Performance |
| Timeline |
| Omni Small Cap |
| Americafirst Defensive |
Omni Small-cap and Americafirst Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omni Small-cap and Americafirst Defensive
The main advantage of trading using opposite Omni Small-cap and Americafirst Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omni Small-cap position performs unexpectedly, Americafirst Defensive 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 Americafirst Defensive will offset losses from the drop in Americafirst Defensive's long position.| Omni Small-cap vs. Arrow Managed Futures | Omni Small-cap vs. Inflation Linked Fixed Income | Omni Small-cap vs. Ab Bond Inflation | Omni Small-cap vs. Ab Bond Inflation |
| Americafirst Defensive vs. Elfun Government Money | Americafirst Defensive vs. Dws Government Money | Americafirst Defensive vs. Hewitt Money Market | Americafirst Defensive vs. Chestnut Street Exchange |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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