Correlation Between Omni Small and Oppenheimer Discovery

Can any of the company-specific risk be diversified away by investing in both Omni Small and Oppenheimer 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 Omni Small and Oppenheimer Discovery 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 Oppenheimer Discovery Fd, you can compare the effects of market volatilities on Omni Small and Oppenheimer 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 Omni Small with a short position of Oppenheimer Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small and Oppenheimer Discovery.

Diversification Opportunities for Omni Small and Oppenheimer Discovery

0.9

Correlation Coefficient

Omni Small  Oppenheimer Discovery

Almost no diversification

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

Pair Corralation between Omni Small and Oppenheimer Discovery

Assuming the 90 days horizon Omni Small is expected to generate 1.12 times less return on investment than Oppenheimer Discovery. In addition to that, Omni Small is 1.14 times more volatile than Oppenheimer Discovery Fd. It trades about 0.13 of its total potential returns per unit of risk. Oppenheimer Discovery Fd is currently generating about 0.17 per unit of volatility. If you would invest  12,265  in Oppenheimer Discovery Fd on September 12, 2024 and sell it today you would earn a total of  1,655  from holding Oppenheimer Discovery Fd or generate 13.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Omni Small Cap Value  vs.  Oppenheimer Discovery Fd

Omni Small Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Omni Small Cap Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Omni Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oppenheimer Discovery

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Discovery Fd are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Oppenheimer Discovery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Omni Small and Oppenheimer Discovery

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

The idea behind Omni Small Cap Value and Oppenheimer Discovery Fd 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.