Correlation Between Oberweis Emerging and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Oberweis Emerging and Kinetics 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 Oberweis Emerging and Kinetics Small 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 Kinetics Small Cap, you can compare the effects of market volatilities on Oberweis Emerging and Kinetics 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 Oberweis Emerging with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oberweis Emerging and Kinetics Small.
Diversification Opportunities for Oberweis Emerging and Kinetics Small
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oberweis and Kinetics is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Oberweis Emerging Growth and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap 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 Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Oberweis Emerging i.e., Oberweis Emerging and Kinetics Small go up and down completely randomly.
Pair Corralation between Oberweis Emerging and Kinetics Small
Assuming the 90 days horizon Oberweis Emerging is expected to generate 10.44 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Oberweis Emerging Growth is 1.89 times less risky than Kinetics Small. It trades about 0.07 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 17,631 in Kinetics Small Cap on August 30, 2024 and sell it today you would earn a total of 4,667 from holding Kinetics Small Cap or generate 26.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oberweis Emerging Growth vs. Kinetics Small Cap
Performance |
| Timeline |
| Oberweis Emerging Growth |
| Kinetics Small Cap |
Oberweis Emerging and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oberweis Emerging and Kinetics Small
The main advantage of trading using opposite Oberweis Emerging and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oberweis Emerging position performs unexpectedly, Kinetics 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 Kinetics Small will offset losses from the drop in Kinetics Small's long position.The idea behind Oberweis Emerging Growth and Kinetics Small Cap 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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