Correlation Between American Funds and Omni Small-cap
Can any of the company-specific risk be diversified away by investing in both American Funds and Omni Small-cap 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 Funds and Omni Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Capital and Omni Small Cap Value, you can compare the effects of market volatilities on American Funds and Omni Small-cap 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 Funds with a short position of Omni Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Omni Small-cap.
Diversification Opportunities for American Funds and Omni Small-cap
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Omni is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Capital 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 Funds 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 Funds Capital are associated (or correlated) with Omni Small-cap. 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 Funds i.e., American Funds and Omni Small-cap go up and down completely randomly.
Pair Corralation between American Funds and Omni Small-cap
Assuming the 90 days horizon American Funds Capital is expected to under-perform the Omni Small-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds Capital is 4.51 times less risky than Omni Small-cap. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Omni Small Cap Value is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,990 in Omni Small Cap Value on August 29, 2024 and sell it today you would earn a total of 150.00 from holding Omni Small Cap Value or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Capital vs. Omni Small Cap Value
Performance |
| Timeline |
| American Funds Capital |
| Omni Small Cap |
American Funds and Omni Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Omni Small-cap
The main advantage of trading using opposite American Funds and Omni Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Omni Small-cap 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-cap will offset losses from the drop in Omni Small-cap's long position.| American Funds vs. Omni Small Cap Value | American Funds vs. Issachar Fund Class | American Funds vs. Versatile Bond Portfolio | American Funds vs. Shelton Funds |
| Omni Small-cap vs. Lord Abbett Diversified | Omni Small-cap vs. Tiaa Cref Smallmid Cap Equity | Omni Small-cap vs. Tiaa Cref Small Cap Blend | Omni Small-cap vs. Guggenheim Diversified Income |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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