Correlation Between Optimum Large and Optimum Small-mid
Can any of the company-specific risk be diversified away by investing in both Optimum Large 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 Large 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 Large Cap and Optimum Small Mid Cap, you can compare the effects of market volatilities on Optimum Large 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 Large with a short position of Optimum Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum Large and Optimum Small-mid.
Diversification Opportunities for Optimum Large and Optimum Small-mid
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Optimum and Optimum is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Large Cap 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 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 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 Large i.e., Optimum Large and Optimum Small-mid go up and down completely randomly.
Pair Corralation between Optimum Large and Optimum Small-mid
Assuming the 90 days horizon Optimum Large is expected to generate 1.58 times less return on investment than Optimum Small-mid. But when comparing it to its historical volatility, Optimum Large Cap is 1.41 times less risky than Optimum Small-mid. It trades about 0.32 of its potential returns per unit of risk. Optimum Small Mid Cap is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 671.00 in Optimum Small Mid Cap on September 1, 2024 and sell it today you would earn a total of 72.00 from holding Optimum Small Mid Cap or generate 10.73% 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. Optimum Small Mid Cap
Performance |
| Timeline |
| Optimum Large Cap |
| Optimum Small Mid |
Optimum Large and Optimum Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimum Large and Optimum Small-mid
The main advantage of trading using opposite Optimum Large and Optimum Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum Large 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 Large vs. Optimum Small Mid Cap | Optimum Large vs. Optimum Small Mid Cap | Optimum Large vs. Ivy Apollo Multi Asset | Optimum Large vs. Optimum Fixed Income |
| Optimum Small-mid vs. Principal Lifetime Hybrid | Optimum Small-mid vs. Delaware Limited Term Diversified | Optimum Small-mid vs. Tiaa Cref Smallmid Cap Equity | Optimum Small-mid vs. Blackrock Sm Cap |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |