Correlation Between Optimum Small and First Investors

Specify exactly 2 symbols:
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

0.96
  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 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 generate 1.79 times more return on investment than First Investors. However, Optimum Small is 1.79 times more volatile than First Investors Opportunity. It trades about -0.04 of its potential returns per unit of risk. First Investors Opportunity is currently generating about -0.13 per unit of risk. If you would invest  737.00  in Optimum Small Mid Cap on September 12, 2024 and sell it today you would lose (7.00) from holding Optimum Small Mid Cap or give up 0.95% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

Optimum Small Mid Cap  vs.  First Investors Opportunity

 Performance 
       Timeline  
Optimum Small Mid 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Optimum Small Mid Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Optimum Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.
First Investors Oppo 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in First Investors Opportunity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Investors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.
The idea behind Optimum Small Mid Cap and First Investors Opportunity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes