Correlation Between Omni Small-cap and Equinox Chesapeake

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

Diversification Opportunities for Omni Small-cap and Equinox Chesapeake

-0.49

Correlation Coefficient

Omni Small-cap  Equinox Chesapeake

Very good diversification

The 3 months correlation between Omni and Equinox is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Equinox Chesapeake Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinox Chesapeake 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 Equinox Chesapeake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinox Chesapeake has no effect on the direction of Omni Small-cap i.e., Omni Small-cap and Equinox Chesapeake go up and down completely randomly.

Pair Corralation between Omni Small-cap and Equinox Chesapeake

Assuming the 90 days horizon Omni Small Cap Value is expected to generate 1.9 times more return on investment than Equinox Chesapeake. However, Omni Small-cap is 1.9 times more volatile than Equinox Chesapeake Strategy. It trades about 0.05 of its potential returns per unit of risk. Equinox Chesapeake Strategy is currently generating about -0.04 per unit of risk. If you would invest  1,481  in Omni Small Cap Value on October 24, 2024 and sell it today you would earn a total of  371.00  from holding Omni Small Cap Value or generate 25.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.54%
Values	Daily Returns

Omni Small Cap Value  vs.  Equinox Chesapeake Strategy

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-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Equinox Chesapeake

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equinox Chesapeake Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Equinox Chesapeake 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-cap and Equinox Chesapeake

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

The idea behind Omni Small Cap Value and Equinox Chesapeake Strategy 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.