Correlation Between Mid Cap and Oberweis Small
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Oberweis 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 Mid Cap and Oberweis Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Value and Oberweis Small Cap Opportunities, you can compare the effects of market volatilities on Mid Cap and Oberweis 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 Mid Cap with a short position of Oberweis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Oberweis Small.
Diversification Opportunities for Mid Cap and Oberweis Small
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and Oberweis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and Oberweis Small Cap Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Small Cap and Mid 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 Mid Cap Value are associated (or correlated) with Oberweis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Small Cap has no effect on the direction of Mid Cap i.e., Mid Cap and Oberweis Small go up and down completely randomly.
Pair Corralation between Mid Cap and Oberweis Small
Assuming the 90 days horizon Mid Cap is expected to generate 1.5 times less return on investment than Oberweis Small. But when comparing it to its historical volatility, Mid Cap Value is 1.66 times less risky than Oberweis Small. It trades about 0.07 of its potential returns per unit of risk. Oberweis Small Cap Opportunities is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,136 in Oberweis Small Cap Opportunities on August 31, 2024 and sell it today you would earn a total of 593.00 from holding Oberweis Small Cap Opportunities or generate 27.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Value vs. Oberweis Small Cap Opportuniti
Performance |
| Timeline |
| Mid Cap Value |
| Oberweis Small Cap |
Mid Cap and Oberweis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Oberweis Small
The main advantage of trading using opposite Mid Cap and Oberweis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Oberweis 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 Oberweis Small will offset losses from the drop in Oberweis Small's long position.| Mid Cap vs. Janus Triton Fund | Mid Cap vs. New World Fund | Mid Cap vs. Fidelity Mid Cap | Mid Cap vs. Mfs Value Fund |
| Oberweis Small vs. Oberweis Micro Cap Fund | Oberweis Small vs. Oberweis Emerging Growth | Oberweis Small vs. Oberweis International Opportunities | Oberweis Small vs. Needham Aggressive Growth |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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