Correlation Between Optimum International and Optimum Small-mid
Can any of the company-specific risk be diversified away by investing in both Optimum International and Optimum Small-mid 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 International and Optimum Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimum International Fund and Optimum Small Mid Cap, you can compare the effects of market volatilities on Optimum International and Optimum Small-mid 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 International with a short position of Optimum Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum International and Optimum Small-mid.
Diversification Opportunities for Optimum International and Optimum Small-mid
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Optimum and Optimum is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Optimum International Fund 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 Optimum International 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 International Fund are associated (or correlated) with Optimum Small-mid. 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 Optimum International i.e., Optimum International and Optimum Small-mid go up and down completely randomly.
Pair Corralation between Optimum International and Optimum Small-mid
Assuming the 90 days horizon Optimum International Fund is expected to under-perform the Optimum Small-mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Optimum International Fund is 1.99 times less risky than Optimum Small-mid. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Optimum Small Mid Cap is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 685.00 in Optimum Small Mid Cap on August 29, 2024 and sell it today you would earn a total of 59.00 from holding Optimum Small Mid Cap or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optimum International Fund vs. Optimum Small Mid Cap
Performance |
| Timeline |
| Optimum International |
| Optimum Small Mid |
Optimum International and Optimum Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimum International and Optimum Small-mid
The main advantage of trading using opposite Optimum International and Optimum Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum International position performs unexpectedly, Optimum Small-mid 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-mid will offset losses from the drop in Optimum Small-mid's long position.| Optimum International vs. Scharf Global Opportunity | Optimum International vs. Balanced Fund Investor | Optimum International vs. Materials Portfolio Fidelity | Optimum International vs. Iaadx |
| Optimum Small-mid vs. Optimum International Fund | Optimum Small-mid vs. Optimum Small Mid Cap | Optimum Small-mid vs. Optimum Fixed Income | Optimum Small-mid vs. Optimum International 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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