Correlation Between Growth Fund and Omni Small-cap
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Omni Small-cap 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 Growth Fund and Omni Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Omni Small Cap Value, you can compare the effects of market volatilities on Growth Fund and Omni Small-cap 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 Growth Fund with a short position of Omni Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Omni Small-cap.
Diversification Opportunities for Growth Fund and Omni Small-cap
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Omni is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Omni Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omni Small Cap and Growth Fund 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 Growth Fund Of are associated (or correlated) with Omni Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omni Small Cap has no effect on the direction of Growth Fund i.e., Growth Fund and Omni Small-cap go up and down completely randomly.
Pair Corralation between Growth Fund and Omni Small-cap
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.7 times more return on investment than Omni Small-cap. However, Growth Fund Of is 1.44 times less risky than Omni Small-cap. It trades about 0.1 of its potential returns per unit of risk. Omni Small Cap Value is currently generating about 0.06 per unit of risk. If you would invest 6,206 in Growth Fund Of on September 1, 2024 and sell it today you would earn a total of 1,200 from holding Growth Fund Of or generate 19.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Growth Fund Of vs. Omni Small Cap Value
Performance |
| Timeline |
| Growth Fund |
| Omni Small Cap |
Growth Fund and Omni Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Omni Small-cap
The main advantage of trading using opposite Growth Fund and Omni Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Omni Small-cap 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 Omni Small-cap will offset losses from the drop in Omni Small-cap's long position.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Washington Mutual Investors | Growth Fund vs. Capital World Growth | Growth Fund vs. American Balanced Fund |
| Omni Small-cap vs. Cref Inflation Linked Bond | Omni Small-cap vs. Ab Bond Inflation | Omni Small-cap vs. Ab Bond Inflation | Omni Small-cap vs. Ab Bond Inflation |
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 Stocks Directory module to find actively traded stocks across global markets.
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