Correlation Between First Investors and Optimum Small
Can any of the company-specific risk be diversified away by investing in both First Investors and Optimum 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 First Investors and Optimum Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Investors Select and Optimum Small Mid Cap, you can compare the effects of market volatilities on First Investors and Optimum 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 First Investors with a short position of Optimum Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Investors and Optimum Small.
Diversification Opportunities for First Investors and Optimum Small
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Optimum is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Investors Select and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid and First Investors 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 First Investors Select are associated (or correlated) with Optimum Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of First Investors i.e., First Investors and Optimum Small go up and down completely randomly.
Pair Corralation between First Investors and Optimum Small
Assuming the 90 days horizon First Investors Select is expected to generate 0.73 times more return on investment than Optimum Small. However, First Investors Select is 1.38 times less risky than Optimum Small. It trades about 0.32 of its potential returns per unit of risk. Optimum Small Mid Cap is currently generating about 0.22 per unit of risk. If you would invest 1,193 in First Investors Select on August 26, 2024 and sell it today you would earn a total of 90.00 from holding First Investors Select or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Investors Select vs. Optimum Small Mid Cap
Performance |
| Timeline |
| First Investors Select |
| Optimum Small Mid |
First Investors and Optimum Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Investors and Optimum Small
The main advantage of trading using opposite First Investors and Optimum Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Investors position performs unexpectedly, Optimum 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 Optimum Small will offset losses from the drop in Optimum Small's long position.| First Investors vs. Fidelity Advisor Technology | First Investors vs. Firsthand Technology Opportunities | First Investors vs. Pgim Jennison Technology | First Investors vs. Science Technology Fund |
| Optimum Small vs. Optimum Small Mid Cap | Optimum Small vs. Ivy Apollo Multi Asset | Optimum Small vs. Optimum Fixed Income | Optimum Small vs. Ivy Asset Strategy |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |