Correlation Between Optimum Small and First Investors
Can any of the company-specific risk be diversified away by investing in both Optimum Small and First Investors 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 Optimum Small and First Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimum Small Mid Cap and First Investors Growth, you can compare the effects of market volatilities on Optimum Small and First Investors 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 Optimum Small with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum Small and First Investors.
Diversification Opportunities for Optimum Small and First Investors
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Optimum and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Small Mid Cap and First Investors Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Growth and Optimum 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 Optimum Small Mid Cap are associated (or correlated) with First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Growth has no effect on the direction of Optimum Small i.e., Optimum Small and First Investors go up and down completely randomly.
Pair Corralation between Optimum Small and First Investors
Assuming the 90 days horizon Optimum Small is expected to generate 1.04 times less return on investment than First Investors. In addition to that, Optimum Small is 1.4 times more volatile than First Investors Growth. It trades about 0.06 of its total potential returns per unit of risk. First Investors Growth is currently generating about 0.08 per unit of volatility. If you would invest 1,259 in First Investors Growth on September 3, 2024 and sell it today you would earn a total of 456.00 from holding First Investors Growth or generate 36.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optimum Small Mid Cap vs. First Investors Growth
Performance |
| Timeline |
| Optimum Small Mid |
| First Investors Growth |
Optimum Small and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimum Small and First Investors
The main advantage of trading using opposite Optimum Small and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum Small position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.| Optimum Small vs. Massmutual Premier Diversified | Optimum Small vs. Lord Abbett Diversified | Optimum Small vs. Adams Diversified Equity | Optimum Small vs. Aqr Diversified Arbitrage |
| First Investors vs. International Investors Gold | First Investors vs. Gold And Precious | First Investors vs. Oppenheimer Gold Special | First Investors vs. Europac Gold Fund |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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