Correlation Between Simt Small and Omni Small-cap
Can any of the company-specific risk be diversified away by investing in both Simt Small 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 Simt Small 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 Simt Small Cap and Omni Small Cap Value, you can compare the effects of market volatilities on Simt Small 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 Simt Small with a short position of Omni Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Small and Omni Small-cap.
Diversification Opportunities for Simt Small and Omni Small-cap
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Simt and Omni is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Simt Small Cap 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 Simt 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 Simt Small Cap 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 Simt Small i.e., Simt Small and Omni Small-cap go up and down completely randomly.
Pair Corralation between Simt Small and Omni Small-cap
Assuming the 90 days horizon Simt Small Cap is expected to generate 0.92 times more return on investment than Omni Small-cap. However, Simt Small Cap is 1.08 times less risky than Omni Small-cap. It trades about 0.22 of its potential returns per unit of risk. Omni Small Cap Value is currently generating about 0.2 per unit of risk. If you would invest 2,644 in Simt Small Cap on August 30, 2024 and sell it today you would earn a total of 224.00 from holding Simt Small Cap or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt Small Cap vs. Omni Small Cap Value
Performance |
| Timeline |
| Simt Small Cap |
| Omni Small Cap |
Simt Small and Omni Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Small and Omni Small-cap
The main advantage of trading using opposite Simt Small and Omni Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Small 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.| Simt Small vs. Vanguard Small Cap Value | Simt Small vs. Vanguard Small Cap Value | Simt Small vs. American Beacon Small |
| Omni Small-cap vs. Lord Abbett Diversified | Omni Small-cap vs. Tiaa Cref Smallmid Cap Equity | Omni Small-cap vs. Tiaa Cref Small Cap Blend | Omni Small-cap vs. Guggenheim Diversified Income |
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.
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