Correlation Between Omni Small-cap and Mutual Of

Can any of the company-specific risk be diversified away by investing in both Omni Small-cap and Mutual Of 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 Omni Small-cap and Mutual Of into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Omni Small Cap Value and Mutual Of America, you can compare the effects of market volatilities on Omni Small-cap and Mutual Of 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 Omni Small-cap with a short position of Mutual Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small-cap and Mutual Of.

Diversification Opportunities for Omni Small-cap and Mutual Of

0.97

Correlation Coefficient

Omni Small-cap  Mutual Of

Almost no diversification

The 3 months correlation between Omni and Mutual is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Mutual Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Of America and Omni Small-cap 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 Omni Small Cap Value are associated (or correlated) with Mutual Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Of America has no effect on the direction of Omni Small-cap i.e., Omni Small-cap and Mutual Of go up and down completely randomly.

Pair Corralation between Omni Small-cap and Mutual Of

Assuming the 90 days horizon Omni Small-cap is expected to generate 1.12 times less return on investment than Mutual Of. In addition to that, Omni Small-cap is 1.18 times more volatile than Mutual Of America. It trades about 0.08 of its total potential returns per unit of risk. Mutual Of America is currently generating about 0.11 per unit of volatility. If you would invest  1,351  in Mutual Of America on July 7, 2024 and sell it today you would earn a total of  127.00  from holding Mutual Of America or generate 9.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Omni Small Cap Value  vs.  Mutual Of America

Omni Small Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Omni Small Cap Value are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Omni Small-cap may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Mutual Of America

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mutual Of America are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Mutual Of may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Omni Small-cap and Mutual Of

The main advantage of trading using opposite Omni Small-cap and Mutual Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omni Small-cap position performs unexpectedly, Mutual Of 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 Mutual Of will offset losses from the drop in Mutual Of's long position.

The idea behind Omni Small Cap Value and Mutual Of America pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.