Correlation Between Optimum Small and Optimum International
Can any of the company-specific risk be diversified away by investing in both Optimum Small and Optimum International 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 Optimum Small and Optimum International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimum Small Mid Cap and Optimum International Fund, you can compare the effects of market volatilities on Optimum Small and Optimum International 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 Optimum Small with a short position of Optimum International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum Small and Optimum International.
Diversification Opportunities for Optimum Small and Optimum International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Optimum and Optimum is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Small Mid Cap and Optimum International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum International and Optimum 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 Optimum Small Mid Cap are associated (or correlated) with Optimum International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum International has no effect on the direction of Optimum Small i.e., Optimum Small and Optimum International go up and down completely randomly.
Pair Corralation between Optimum Small and Optimum International
Assuming the 90 days horizon Optimum Small Mid Cap is expected to under-perform the Optimum International. In addition to that, Optimum Small is 1.47 times more volatile than Optimum International Fund. It trades about -0.01 of its total potential returns per unit of risk. Optimum International Fund is currently generating about 0.08 per unit of volatility. If you would invest 1,349 in Optimum International Fund on March 23, 2025 and sell it today you would earn a total of 89.00 from holding Optimum International Fund or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optimum Small Mid Cap vs. Optimum International Fund
Performance |
| Timeline |
| Optimum Small Mid |
| Optimum International |
Optimum Small and Optimum International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimum Small and Optimum International
The main advantage of trading using opposite Optimum Small and Optimum International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum Small position performs unexpectedly, Optimum International 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 Optimum International will offset losses from the drop in Optimum International's long position.| Optimum Small vs. Matson Money Fixed | Optimum Small vs. Janus Investment | Optimum Small vs. Cavanal Hill Funds | Optimum Small vs. Legg Mason Partners |
| Optimum International vs. Legg Mason Partners | Optimum International vs. Ab Global Bond | Optimum International vs. Barings Global Floating | Optimum International vs. Qs Global Equity |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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