Correlation Between American Funds and Oberweis Emerging
Can any of the company-specific risk be diversified away by investing in both American Funds and Oberweis Emerging 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 American Funds and Oberweis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Smallcap and Oberweis Emerging Growth, you can compare the effects of market volatilities on American Funds and Oberweis Emerging 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 American Funds with a short position of Oberweis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Oberweis Emerging.
Diversification Opportunities for American Funds and Oberweis Emerging
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Oberweis is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Smallcap and Oberweis Emerging Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Emerging Growth and American Funds 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 American Funds Smallcap are associated (or correlated) with Oberweis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Emerging Growth has no effect on the direction of American Funds i.e., American Funds and Oberweis Emerging go up and down completely randomly.
Pair Corralation between American Funds and Oberweis Emerging
Assuming the 90 days horizon American Funds is expected to generate 1.82 times less return on investment than Oberweis Emerging. But when comparing it to its historical volatility, American Funds Smallcap is 1.4 times less risky than Oberweis Emerging. It trades about 0.06 of its potential returns per unit of risk. Oberweis Emerging Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,803 in Oberweis Emerging Growth on September 1, 2024 and sell it today you would earn a total of 331.00 from holding Oberweis Emerging Growth or generate 11.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Smallcap vs. Oberweis Emerging Growth
Performance |
| Timeline |
| American Funds Smallcap |
| Oberweis Emerging Growth |
American Funds and Oberweis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Oberweis Emerging
The main advantage of trading using opposite American Funds and Oberweis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Oberweis Emerging 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 Emerging will offset losses from the drop in Oberweis Emerging's long position.| American Funds vs. Meeder Funds | American Funds vs. Ashmore Emerging Markets | American Funds vs. Prudential Government Money | American Funds vs. Jpmorgan Trust I |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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