Correlation Between Needham Small and Oberweis Small
Can any of the company-specific risk be diversified away by investing in both Needham Small 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 Needham Small and Oberweis Small 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 Small Cap Opportunities, you can compare the effects of market volatilities on Needham Small 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 Needham Small with a short position of Oberweis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Oberweis Small.
Diversification Opportunities for Needham Small and Oberweis Small
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Oberweis is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap 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 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 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 Needham Small i.e., Needham Small and Oberweis Small go up and down completely randomly.
Pair Corralation between Needham Small and Oberweis Small
Assuming the 90 days horizon Needham Small Cap is expected to generate 1.45 times more return on investment than Oberweis Small. However, Needham Small is 1.45 times more volatile than Oberweis Small Cap Opportunities. It trades about 0.04 of its potential returns per unit of risk. Oberweis Small Cap Opportunities is currently generating about 0.05 per unit of risk. If you would invest 1,579 in Needham Small Cap on August 26, 2024 and sell it today you would earn a total of 308.00 from holding Needham Small Cap or generate 19.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Oberweis Small Cap Opportuniti
Performance |
| Timeline |
| Needham Small Cap |
| Oberweis Small Cap |
Needham Small and Oberweis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Oberweis Small
The main advantage of trading using opposite Needham Small and Oberweis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small 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.| 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 Small vs. Oberweis Emerging Growth | Oberweis Small vs. Oberweis International Opportunities | Oberweis Small vs. Needham Aggressive Growth | Oberweis Small 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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