Correlation Between Western Asset and Omni Small-cap
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset 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 Western Asset Inflation and Omni Small Cap Value, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Omni Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Omni Small-cap.
Diversification Opportunities for Western Asset and Omni Small-cap
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Omni is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation 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 Western Asset 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 Western Asset Inflation 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 Western Asset i.e., Western Asset and Omni Small-cap go up and down completely randomly.
Pair Corralation between Western Asset and Omni Small-cap
Assuming the 90 days horizon Western Asset Inflation is expected to under-perform the Omni Small-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Inflation is 5.16 times less risky than Omni Small-cap. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Omni Small Cap Value is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,003 in Omni Small Cap Value on August 31, 2024 and sell it today you would earn a total of 134.00 from holding Omni Small Cap Value or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Omni Small Cap Value
Performance |
| Timeline |
| Western Asset Inflation |
| Omni Small Cap |
Western Asset and Omni Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Omni Small-cap
The main advantage of trading using opposite Western Asset and Omni Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Short Precious Metals | Western Asset vs. Gamco Global Gold | Western Asset vs. Gold And Precious | Western Asset vs. Precious Metals And |
| Omni Small-cap vs. Adams Diversified Equity | Omni Small-cap vs. American Century Diversified | Omni Small-cap vs. Aqr Diversified Arbitrage | Omni Small-cap vs. Principal Lifetime Hybrid |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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