Correlation Between Mesirow Financial and Oberweis Micro-cap
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Oberweis Micro-cap 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 Mesirow Financial and Oberweis Micro-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesirow Financial Small and Oberweis Micro Cap Fund, you can compare the effects of market volatilities on Mesirow Financial and Oberweis Micro-cap 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 Mesirow Financial with a short position of Oberweis Micro-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Oberweis Micro-cap.
Diversification Opportunities for Mesirow Financial and Oberweis Micro-cap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mesirow and Oberweis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Oberweis Micro Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Micro Cap and Mesirow Financial 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 Mesirow Financial Small are associated (or correlated) with Oberweis Micro-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Micro Cap has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Oberweis Micro-cap go up and down completely randomly.
Pair Corralation between Mesirow Financial and Oberweis Micro-cap
Assuming the 90 days horizon Mesirow Financial is expected to generate 1.7 times less return on investment than Oberweis Micro-cap. But when comparing it to its historical volatility, Mesirow Financial Small is 1.2 times less risky than Oberweis Micro-cap. It trades about 0.05 of its potential returns per unit of risk. Oberweis Micro Cap Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,252 in Oberweis Micro Cap Fund on August 30, 2024 and sell it today you would earn a total of 1,676 from holding Oberweis Micro Cap Fund or generate 51.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial Small vs. Oberweis Micro Cap Fund
Performance |
| Timeline |
| Mesirow Financial Small |
| Oberweis Micro Cap |
Mesirow Financial and Oberweis Micro-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and Oberweis Micro-cap
The main advantage of trading using opposite Mesirow Financial and Oberweis Micro-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, Oberweis Micro-cap 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 Micro-cap will offset losses from the drop in Oberweis Micro-cap's long position.| Mesirow Financial vs. Bbh Limited Duration | Mesirow Financial vs. Fa 529 Aggressive | Mesirow Financial vs. Abr 7525 Volatility | Mesirow Financial vs. Balanced Fund Investor |
| Oberweis Micro-cap vs. Putnam Equity Income | Oberweis Micro-cap vs. Putnam Growth Opportunities | Oberweis Micro-cap vs. HUMANA INC | Oberweis Micro-cap vs. Aquagold International |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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