Correlation Between Needham Small and Oberweis Micro-cap
Can any of the company-specific risk be diversified away by investing in both Needham Small 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 Needham Small 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 Needham Small Cap and Oberweis Micro Cap Fund, you can compare the effects of market volatilities on Needham Small 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 Needham Small with a short position of Oberweis Micro-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Oberweis Micro-cap.
Diversification Opportunities for Needham Small and Oberweis Micro-cap
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Needham and Oberweis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap 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 Needham Small 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 Needham Small Cap 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 Needham Small i.e., Needham Small and Oberweis Micro-cap go up and down completely randomly.
Pair Corralation between Needham Small and Oberweis Micro-cap
Assuming the 90 days horizon Needham Small is expected to generate 1.17 times less return on investment than Oberweis Micro-cap. In addition to that, Needham Small is 1.21 times more volatile than Oberweis Micro Cap Fund. It trades about 0.04 of its total potential returns per unit of risk. Oberweis Micro Cap Fund is currently generating about 0.06 per unit of volatility. If you would invest 3,820 in Oberweis Micro Cap Fund on August 26, 2024 and sell it today you would earn a total of 1,004 from holding Oberweis Micro Cap Fund or generate 26.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Oberweis Micro Cap Fund
Performance |
| Timeline |
| Needham Small Cap |
| Oberweis Micro Cap |
Needham Small and Oberweis Micro-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Oberweis Micro-cap
The main advantage of trading using opposite Needham Small and Oberweis Micro-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small 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.| Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Growth Fund | Needham Small vs. Baron Opportunity Fund | Needham Small vs. Jacob Micro Cap |
| Oberweis Micro-cap vs. Oberweis Emerging Growth | Oberweis Micro-cap vs. Oberweis International Opportunities | Oberweis Micro-cap vs. Needham Aggressive Growth | Oberweis Micro-cap vs. Kinetics Small Cap |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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