Correlation Between Small Cap and Oppenhmr Discovery

Can any of the company-specific risk be diversified away by investing in both Small Cap and Oppenhmr Discovery 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 Small Cap and Oppenhmr Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Small Cap Stock and Oppenhmr Discovery Mid, you can compare the effects of market volatilities on Small Cap and Oppenhmr Discovery 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 Small Cap with a short position of Oppenhmr Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Oppenhmr Discovery.

Diversification Opportunities for Small Cap and Oppenhmr Discovery

0.9

Correlation Coefficient

Small Cap  Oppenhmr Discovery

Almost no diversification

The 3 months correlation between Small and Oppenhmr is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Oppenhmr Discovery Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenhmr Discovery Mid and 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 Small Cap Stock are associated (or correlated) with Oppenhmr Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenhmr Discovery Mid has no effect on the direction of Small Cap i.e., Small Cap and Oppenhmr Discovery go up and down completely randomly.

Pair Corralation between Small Cap and Oppenhmr Discovery

Assuming the 90 days horizon Small Cap is expected to generate 1.86 times less return on investment than Oppenhmr Discovery. In addition to that, Small Cap is 1.31 times more volatile than Oppenhmr Discovery Mid. It trades about 0.13 of its total potential returns per unit of risk. Oppenhmr Discovery Mid is currently generating about 0.31 per unit of volatility. If you would invest  3,201  in Oppenhmr Discovery Mid on September 2, 2024 and sell it today you would earn a total of  660.00  from holding Oppenhmr Discovery Mid or generate 20.62% return on investment over 90 days.

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

Small Cap Stock  vs.  Oppenhmr Discovery Mid

Small Cap Stock

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Stock are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oppenhmr Discovery Mid

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenhmr Discovery Mid are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Oppenhmr Discovery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Small Cap and Oppenhmr Discovery

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

The idea behind Small Cap Stock and Oppenhmr Discovery Mid 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.