Correlation Between Omni Small-cap and Northern Small
Can any of the company-specific risk be diversified away by investing in both Omni Small-cap and Northern Small 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 Northern Small 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 Northern Small Cap, you can compare the effects of market volatilities on Omni Small-cap and Northern Small 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 Northern Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small-cap and Northern Small.
Diversification Opportunities for Omni Small-cap and Northern Small
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Omni and Northern is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Northern Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Small Cap 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 Northern Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Small Cap has no effect on the direction of Omni Small-cap i.e., Omni Small-cap and Northern Small go up and down completely randomly.
Pair Corralation between Omni Small-cap and Northern Small
Assuming the 90 days horizon Omni Small Cap Value is expected to generate 1.12 times more return on investment than Northern Small. However, Omni Small-cap is 1.12 times more volatile than Northern Small Cap. It trades about 0.06 of its potential returns per unit of risk. Northern Small Cap is currently generating about 0.06 per unit of risk. If you would invest 1,895 in Omni Small Cap Value on September 3, 2025 and sell it today you would earn a total of 76.00 from holding Omni Small Cap Value or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omni Small Cap Value vs. Northern Small Cap
Performance |
| Timeline |
| Omni Small Cap |
| Northern Small Cap |
Omni Small-cap and Northern Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omni Small-cap and Northern Small
The main advantage of trading using opposite Omni Small-cap and Northern Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omni Small-cap position performs unexpectedly, Northern Small 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 Northern Small will offset losses from the drop in Northern Small's long position.| Omni Small-cap vs. Nuveen Large Cap | Omni Small-cap vs. Victory Rs Large | Omni Small-cap vs. Calvert Moderate Allocation | Omni Small-cap vs. Qs Large Cap |
| Northern Small vs. Morningstar Aggressive Growth | Northern Small vs. Blackrock High Income | Northern Small vs. Vanguard High Yield Tax Exempt | Northern Small vs. John Hancock High |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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