Correlation Between GM and Oberweis International
Can any of the company-specific risk be diversified away by investing in both GM and Oberweis 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 GM and Oberweis International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Oberweis International Opportunities, you can compare the effects of market volatilities on GM and Oberweis 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 GM with a short position of Oberweis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Oberweis International.
Diversification Opportunities for GM and Oberweis International
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Oberweis is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Oberweis International Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis International and GM 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 General Motors are associated (or correlated) with Oberweis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis International has no effect on the direction of GM i.e., GM and Oberweis International go up and down completely randomly.
Pair Corralation between GM and Oberweis International
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Oberweis International. In addition to that, GM is 3.25 times more volatile than Oberweis International Opportunities. It trades about -0.32 of its total potential returns per unit of risk. Oberweis International Opportunities is currently generating about 0.13 per unit of volatility. If you would invest 913.00 in Oberweis International Opportunities on November 28, 2024 and sell it today you would earn a total of 17.00 from holding Oberweis International Opportunities or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Oberweis International Opportu
Performance |
| Timeline |
| General Motors |
| Oberweis International |
GM and Oberweis International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Oberweis International
The main advantage of trading using opposite GM and Oberweis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Oberweis 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 Oberweis International will offset losses from the drop in Oberweis International's long position.The idea behind General Motors and Oberweis International Opportunities 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.| Oberweis International vs. Rmb Mendon Financial | Oberweis International vs. Rmb Mendon Financial | Oberweis International vs. Putnam Global Financials | Oberweis International vs. Gabelli Global Financial |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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