Correlation Between Omni Small-cap and Acadian Emerging
Can any of the company-specific risk be diversified away by investing in both Omni Small-cap and Acadian Emerging 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 Acadian Emerging 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 Acadian Emerging Markets, you can compare the effects of market volatilities on Omni Small-cap and Acadian Emerging 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 Acadian Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small-cap and Acadian Emerging.
Diversification Opportunities for Omni Small-cap and Acadian Emerging
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Omni and Acadian is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Acadian Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadian Emerging Markets 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 Acadian Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadian Emerging Markets has no effect on the direction of Omni Small-cap i.e., Omni Small-cap and Acadian Emerging go up and down completely randomly.
Pair Corralation between Omni Small-cap and Acadian Emerging
Assuming the 90 days horizon Omni Small Cap Value is expected to under-perform the Acadian Emerging. In addition to that, Omni Small-cap is 1.2 times more volatile than Acadian Emerging Markets. It trades about -0.27 of its total potential returns per unit of risk. Acadian Emerging Markets is currently generating about 0.02 per unit of volatility. If you would invest 2,248 in Acadian Emerging Markets on December 3, 2024 and sell it today you would earn a total of 8.00 from holding Acadian Emerging Markets or generate 0.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Omni Small Cap Value vs. Acadian Emerging Markets
Performance |
Timeline |
Omni Small Cap |
Acadian Emerging Markets |
Omni Small-cap and Acadian Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Omni Small-cap and Acadian Emerging
The main advantage of trading using opposite Omni Small-cap and Acadian Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omni Small-cap position performs unexpectedly, Acadian Emerging 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 Acadian Emerging will offset losses from the drop in Acadian Emerging's long position.Omni Small-cap vs. Guidemark E Fixed | Omni Small-cap vs. Pro Blend Servative Term | Omni Small-cap vs. Qs International Equity | Omni Small-cap vs. Dodge International Stock |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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