Correlation Between Optimum Small-mid and First Investors
Can any of the company-specific risk be diversified away by investing in both Optimum Small-mid 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-mid 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-mid 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-mid with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum Small-mid and First Investors.
Diversification Opportunities for Optimum Small-mid and First Investors
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Optimum and First is 0.98. 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-mid 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-mid i.e., Optimum Small-mid and First Investors go up and down completely randomly.
Pair Corralation between Optimum Small-mid and First Investors
Assuming the 90 days horizon Optimum Small Mid Cap is expected to generate 1.45 times more return on investment than First Investors. However, Optimum Small-mid is 1.45 times more volatile than First Investors Growth. It trades about 0.1 of its potential returns per unit of risk. First Investors Growth is currently generating about 0.13 per unit of risk. If you would invest 1,133 in Optimum Small Mid Cap on August 31, 2024 and sell it today you would earn a total of 162.00 from holding Optimum Small Mid Cap or generate 14.3% 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-mid and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimum Small-mid and First Investors
The main advantage of trading using opposite Optimum Small-mid and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum Small-mid 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 Growth 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.
| First Investors vs. Angel Oak Multi Strategy | First Investors vs. Franklin Emerging Market | First Investors vs. Transamerica Emerging Markets | First Investors vs. Dws Emerging Markets |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |