Correlation Between Omni Small and Hawaii Municipal

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

Diversification Opportunities for Omni Small and Hawaii Municipal

0.5

Correlation Coefficient

Omni Small  Hawaii Municipal

Very weak diversification

The 3 months correlation between Omni and Hawaii is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Hawaii Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaii Municipal Bond 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 Hawaii Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaii Municipal Bond has no effect on the direction of Omni Small i.e., Omni Small and Hawaii Municipal go up and down completely randomly.

Pair Corralation between Omni Small and Hawaii Municipal

Assuming the 90 days horizon Omni Small Cap Value is expected to generate 6.72 times more return on investment than Hawaii Municipal. However, Omni Small is 6.72 times more volatile than Hawaii Municipal Bond. It trades about 0.08 of its potential returns per unit of risk. Hawaii Municipal Bond is currently generating about 0.08 per unit of risk. If you would invest  1,826  in Omni Small Cap Value on October 25, 2024 and sell it today you would earn a total of  26.00  from holding Omni Small Cap Value or generate 1.42% return on investment over 90 days.

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

Omni Small Cap Value  vs.  Hawaii Municipal Bond

Omni Small Cap

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Omni Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hawaii Municipal Bond

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hawaii Municipal Bond are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Hawaii Municipal 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 Hawaii Municipal

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

The idea behind Omni Small Cap Value and Hawaii Municipal Bond 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.