Correlation Between Small-cap Value and Omni Small-cap
Can any of the company-specific risk be diversified away by investing in both Small-cap Value 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 Small-cap Value 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 Small Cap Value Fund and Omni Small Cap Value, you can compare the effects of market volatilities on Small-cap Value 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 Small-cap Value with a short position of Omni Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Omni Small-cap.
Diversification Opportunities for Small-cap Value and Omni Small-cap
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Small-cap and Omni is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Fund 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 Small-cap Value 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 Value Fund 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 Small-cap Value i.e., Small-cap Value and Omni Small-cap go up and down completely randomly.
Pair Corralation between Small-cap Value and Omni Small-cap
Assuming the 90 days horizon Small Cap Value Fund is expected to generate 0.92 times more return on investment than Omni Small-cap. However, Small Cap Value Fund is 1.09 times less risky than Omni Small-cap. It trades about 0.2 of its potential returns per unit of risk. Omni Small Cap Value is currently generating about 0.18 per unit of risk. If you would invest 3,349 in Small Cap Value Fund on June 13, 2025 and sell it today you would earn a total of 499.00 from holding Small Cap Value Fund or generate 14.9% 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 Value Fund vs. Omni Small Cap Value
Performance |
| Timeline |
| Small Cap Value |
| Omni Small Cap |
Small-cap Value and Omni Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small-cap Value and Omni Small-cap
The main advantage of trading using opposite Small-cap Value and Omni Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-cap Value 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.| Small-cap Value vs. Aggressive Investors 1 | Small-cap Value vs. Bridgeway Global Opportunities | Small-cap Value vs. Ultra Small Pany Market | Small-cap Value vs. Ultra Small Pany Fund |
| Omni Small-cap vs. Aggressive Investors 1 | Omni Small-cap vs. Bridgeway Global Opportunities | Omni Small-cap vs. Ultra Small Pany Market | Omni Small-cap vs. Ultra Small Pany Fund |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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