Correlation Between Omni Small and Income Fund

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

Diversification Opportunities for Omni Small and Income Fund

-0.48

Correlation Coefficient

Omni Small  Income Fund

Very good diversification

The 3 months correlation between Omni and Income is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Income Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund Institutional 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 Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund Institutional has no effect on the direction of Omni Small i.e., Omni Small and Income Fund go up and down completely randomly.

Pair Corralation between Omni Small and Income Fund

Assuming the 90 days horizon Omni Small Cap Value is expected to generate 4.43 times more return on investment than Income Fund. However, Omni Small is 4.43 times more volatile than Income Fund Institutional. It trades about 0.13 of its potential returns per unit of risk. Income Fund Institutional is currently generating about -0.07 per unit of risk. If you would invest  1,900  in Omni Small Cap Value on September 12, 2024 and sell it today you would earn a total of  220.00  from holding Omni Small Cap Value or generate 11.58% return on investment over 90 days.

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

Omni Small Cap Value  vs.  Income Fund Institutional

Omni Small Cap

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Omni Small Cap Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Omni Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Income Fund Institutional

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Income Fund Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Income Fund 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 Income Fund

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

The idea behind Omni Small Cap Value and Income Fund Institutional 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..