Correlation Between Omni Small and Ab Bond

Can any of the company-specific risk be diversified away by investing in both Omni Small and Ab Bond 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 and Ab Bond 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 Ab Bond Inflation, you can compare the effects of market volatilities on Omni Small and Ab Bond 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 with a short position of Ab Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small and Ab Bond.

Diversification Opportunities for Omni Small and Ab Bond

-0.71

Correlation Coefficient

Omni Small  Ab Bond

Pay attention - limited upside

The 3 months correlation between Omni and ANBIX is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Ab Bond Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Bond Inflation and Omni 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 Omni Small Cap Value are associated (or correlated) with Ab Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Bond Inflation has no effect on the direction of Omni Small i.e., Omni Small and Ab Bond go up and down completely randomly.

Pair Corralation between Omni Small and Ab Bond

Assuming the 90 days horizon Omni Small Cap Value is expected to under-perform the Ab Bond. In addition to that, Omni Small is 5.86 times more volatile than Ab Bond Inflation. It trades about -0.11 of its total potential returns per unit of risk. Ab Bond Inflation is currently generating about 0.24 per unit of volatility. If you would invest  1,011  in Ab Bond Inflation on December 20, 2024 and sell it today you would earn a total of  28.00  from holding Ab Bond Inflation or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Omni Small Cap Value  vs.  Ab Bond Inflation

Omni Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Omni Small Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Ab Bond Inflation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Bond Inflation are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ab Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Omni Small and Ab Bond

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

The idea behind Omni Small Cap Value and Ab Bond Inflation 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.