Correlation Between Optimum Large and First Investors
Can any of the company-specific risk be diversified away by investing in both Optimum Large 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 Large 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 Large Cap and First Investors Select, you can compare the effects of market volatilities on Optimum Large 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 Large with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum Large and First Investors.
Diversification Opportunities for Optimum Large and First Investors
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Optimum and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Large Cap and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select and Optimum Large 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 Large 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 Select has no effect on the direction of Optimum Large i.e., Optimum Large and First Investors go up and down completely randomly.
Pair Corralation between Optimum Large and First Investors
Assuming the 90 days horizon Optimum Large is expected to generate 1.43 times less return on investment than First Investors. But when comparing it to its historical volatility, Optimum Large Cap is 1.4 times less risky than First Investors. It trades about 0.13 of its potential returns per unit of risk. First Investors Select is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,183 in First Investors Select on August 29, 2024 and sell it today you would earn a total of 189.00 from holding First Investors Select or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optimum Large Cap vs. First Investors Select
Performance |
| Timeline |
| Optimum Large Cap |
| First Investors Select |
Optimum Large and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimum Large and First Investors
The main advantage of trading using opposite Optimum Large and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum Large 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 Large vs. Artisan Thematic Fund | Optimum Large vs. Growth Fund Of | Optimum Large vs. Ab Value Fund | Optimum Large vs. Omni Small Cap Value |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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