Correlation Between Pabrai Wagons and Omni Small-cap

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Pabrai Wagons and Omni Small-cap 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 Pabrai Wagons and Omni Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pabrai Wagons Institutional and Omni Small Cap Value, you can compare the effects of market volatilities on Pabrai Wagons and Omni Small-cap 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 Pabrai Wagons with a short position of Omni Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pabrai Wagons and Omni Small-cap.

Diversification Opportunities for Pabrai Wagons and Omni Small-cap

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Pabrai and Omni is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pabrai Wagons Institutional and Omni Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omni Small Cap and Pabrai Wagons 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 Pabrai Wagons Institutional are associated (or correlated) with Omni Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omni Small Cap has no effect on the direction of Pabrai Wagons i.e., Pabrai Wagons and Omni Small-cap go up and down completely randomly.

Pair Corralation between Pabrai Wagons and Omni Small-cap

Assuming the 90 days horizon Pabrai Wagons Institutional is expected to generate 0.36 times more return on investment than Omni Small-cap. However, Pabrai Wagons Institutional is 2.78 times less risky than Omni Small-cap. It trades about -0.61 of its potential returns per unit of risk. Omni Small Cap Value is currently generating about -0.39 per unit of risk. If you would invest  1,282  in Pabrai Wagons Institutional on October 9, 2024 and sell it today you would lose (108.00) from holding Pabrai Wagons Institutional or give up 8.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Pabrai Wagons Institutional  vs.  Omni Small Cap Value

 Performance 
       Timeline  
Pabrai Wagons Instit 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pabrai Wagons Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Pabrai Wagons is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Omni Small Cap 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pabrai Wagons and Omni Small-cap Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pabrai Wagons and Omni Small-cap

The main advantage of trading using opposite Pabrai Wagons and Omni Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pabrai Wagons position performs unexpectedly, Omni Small-cap 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 Omni Small-cap will offset losses from the drop in Omni Small-cap's long position.
The idea behind Pabrai Wagons Institutional and Omni Small Cap Value 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 Stocks Directory module to find actively traded stocks across global markets.

Other Complementary Tools

Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals