Correlation Between Cmg Ultra and Optimum Small

Can any of the company-specific risk be diversified away by investing in both Cmg Ultra and Optimum 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 Cmg Ultra and Optimum Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cmg Ultra Short and Optimum Small Mid Cap, you can compare the effects of market volatilities on Cmg Ultra and Optimum 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 Cmg Ultra with a short position of Optimum Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cmg Ultra and Optimum Small.

Diversification Opportunities for Cmg Ultra and Optimum Small

0.77

Correlation Coefficient

Cmg Ultra  Optimum Small

Poor diversification

The 3 months correlation between Cmg and Optimum is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cmg Ultra Short and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid and Cmg Ultra 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 Cmg Ultra Short are associated (or correlated) with Optimum Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of Cmg Ultra i.e., Cmg Ultra and Optimum Small go up and down completely randomly.

Pair Corralation between Cmg Ultra and Optimum Small

Assuming the 90 days horizon Cmg Ultra is expected to generate 9.45 times less return on investment than Optimum Small. But when comparing it to its historical volatility, Cmg Ultra Short is 11.51 times less risky than Optimum Small. It trades about 0.18 of its potential returns per unit of risk. Optimum Small Mid Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  661.00  in Optimum Small Mid Cap on September 12, 2024 and sell it today you would earn a total of  69.00  from holding Optimum Small Mid Cap or generate 10.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cmg Ultra Short  vs.  Optimum Small Mid Cap

Cmg Ultra Short

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cmg Ultra Short are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cmg Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Optimum Small Mid

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Optimum Small Mid Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Optimum Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cmg Ultra and Optimum Small

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

The idea behind Cmg Ultra Short and Optimum Small Mid Cap 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.