Correlation Between Nasdaq 100 and Omni Small-cap
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 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 Nasdaq 100 Index Fund and Omni Small Cap Value, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of Omni Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Omni Small-cap.
Diversification Opportunities for Nasdaq 100 and Omni Small-cap
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasdaq and Omni is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund 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 Nasdaq 100 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 Nasdaq 100 Index Fund 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 Nasdaq 100 i.e., Nasdaq 100 and Omni Small-cap go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Omni Small-cap
Assuming the 90 days horizon Nasdaq 100 is expected to generate 2.58 times less return on investment than Omni Small-cap. But when comparing it to its historical volatility, Nasdaq 100 Index Fund is 1.71 times less risky than Omni Small-cap. It trades about 0.12 of its potential returns per unit of risk. Omni Small Cap Value is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,990 in Omni Small Cap Value on August 29, 2024 and sell it today you would earn a total of 150.00 from holding Omni Small Cap Value or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Omni Small Cap Value
Performance |
| Timeline |
| Nasdaq 100 Index |
| Omni Small Cap |
Nasdaq 100 and Omni Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Omni Small-cap
The main advantage of trading using opposite Nasdaq 100 and Omni Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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.| Nasdaq 100 vs. Balanced Fund Retail | Nasdaq 100 vs. Rbc Global Equity | Nasdaq 100 vs. Calamos Global Equity | Nasdaq 100 vs. Touchstone International Equity |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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