Correlation Between Omni Small and Jpmorgan Strategic

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

Diversification Opportunities for Omni Small and Jpmorgan Strategic

0.62

Correlation Coefficient

Omni Small  Jpmorgan Strategic

Poor diversification

The 3 months correlation between Omni and Jpmorgan is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Jpmorgan Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Strategic Income 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 Jpmorgan Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Strategic Income has no effect on the direction of Omni Small i.e., Omni Small and Jpmorgan Strategic go up and down completely randomly.

Pair Corralation between Omni Small and Jpmorgan Strategic

Assuming the 90 days horizon Omni Small Cap Value is expected to generate 24.09 times more return on investment than Jpmorgan Strategic. However, Omni Small is 24.09 times more volatile than Jpmorgan Strategic Income. It trades about 0.13 of its potential returns per unit of risk. Jpmorgan Strategic Income is currently generating about 0.14 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Omni Small Cap Value  vs.  Jpmorgan Strategic Income

Omni Small Cap

Risk-Adjusted Performance

10 of 100

OK

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.

Jpmorgan Strategic Income

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Strategic Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Jpmorgan Strategic 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 Jpmorgan Strategic

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

The idea behind Omni Small Cap Value and Jpmorgan Strategic Income 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.