Correlation Between Oberweis Emerging and Black Oak
Can any of the company-specific risk be diversified away by investing in both Oberweis Emerging and Black Oak 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 Oberweis Emerging and Black Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oberweis Emerging Growth and Black Oak Emerging, you can compare the effects of market volatilities on Oberweis Emerging and Black Oak 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 Oberweis Emerging with a short position of Black Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oberweis Emerging and Black Oak.
Diversification Opportunities for Oberweis Emerging and Black Oak
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oberweis and Black is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Oberweis Emerging Growth and Black Oak Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Oak Emerging and Oberweis Emerging 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 Oberweis Emerging Growth are associated (or correlated) with Black Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Oak Emerging has no effect on the direction of Oberweis Emerging i.e., Oberweis Emerging and Black Oak go up and down completely randomly.
Pair Corralation between Oberweis Emerging and Black Oak
Assuming the 90 days horizon Oberweis Emerging is expected to generate 1.39 times less return on investment than Black Oak. In addition to that, Oberweis Emerging is 1.2 times more volatile than Black Oak Emerging. It trades about 0.04 of its total potential returns per unit of risk. Black Oak Emerging is currently generating about 0.06 per unit of volatility. If you would invest 726.00 in Black Oak Emerging on October 30, 2024 and sell it today you would earn a total of 9.00 from holding Black Oak Emerging or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Oberweis Emerging Growth vs. Black Oak Emerging
Performance |
| Timeline |
| Oberweis Emerging Growth |
| Black Oak Emerging |
Oberweis Emerging and Black Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oberweis Emerging and Black Oak
The main advantage of trading using opposite Oberweis Emerging and Black Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oberweis Emerging position performs unexpectedly, Black Oak 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 Black Oak will offset losses from the drop in Black Oak's long position.The idea behind Oberweis Emerging Growth and Black Oak Emerging 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.
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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