Correlation Between Omni Small and American Beacon
Can any of the company-specific risk be diversified away by investing in both Omni Small and American Beacon 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 and American Beacon 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 American Beacon Shapiro, you can compare the effects of market volatilities on Omni Small and American Beacon 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 with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small and American Beacon.
Diversification Opportunities for Omni Small and American Beacon
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Omni and American is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro and Omni Small 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Shapiro has no effect on the direction of Omni Small i.e., Omni Small and American Beacon go up and down completely randomly.
Pair Corralation between Omni Small and American Beacon
Assuming the 90 days horizon Omni Small Cap Value is expected to under-perform the American Beacon. In addition to that, Omni Small is 2.5 times more volatile than American Beacon Shapiro. It trades about -0.02 of its total potential returns per unit of risk. American Beacon Shapiro is currently generating about 0.0 per unit of volatility. If you would invest 1,479 in American Beacon Shapiro on September 13, 2024 and sell it today you would lose (1.00) from holding American Beacon Shapiro or give up 0.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Omni Small Cap Value vs. American Beacon Shapiro
Performance |
| Timeline |
| Omni Small Cap |
| American Beacon Shapiro |
Omni Small and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omni Small and American Beacon
The main advantage of trading using opposite Omni Small and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omni Small position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Omni Small vs. Pace Smallmedium Value | Omni Small vs. Great West Loomis Sayles | Omni Small vs. Ab Discovery Value | Omni Small vs. Fidelity Small Cap |
| American Beacon vs. Eip Growth And | American Beacon vs. T Rowe Price | American Beacon vs. Praxis Growth Index | American Beacon vs. Qs Moderate Growth |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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