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 Opportunity, 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
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Optimum and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Small Mid Cap and First Investors Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Oppo 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 Oppo 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 Mid Cap is expected to under-perform the First Investors. In addition to that, Optimum Small is 1.23 times more volatile than First Investors Opportunity. It trades about -0.12 of its total potential returns per unit of risk. First Investors Opportunity is currently generating about -0.13 per unit of volatility. If you would invest 4,067 in First Investors Opportunity on September 12, 2024 and sell it today you would lose (74.00) from holding First Investors Opportunity or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Optimum Small Mid Cap vs. First Investors Opportunity
Performance |
| Timeline |
| Optimum Small Mid |
| First Investors Oppo |
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. Sp Smallcap 600 | Optimum Small vs. Ab Small Cap | Optimum Small vs. Scout Small Cap | Optimum Small vs. Siit Small Mid |
| First Investors vs. Artisan High Income | First Investors vs. T Rowe Price | First Investors vs. Ambrus Core Bond | First Investors vs. Doubleline Yield Opportunities |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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