Correlation Between Oberweis Emerging and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Oberweis Emerging and Mid 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 Oberweis Emerging and Mid Cap 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 Mid Cap 15x Strategy, you can compare the effects of market volatilities on Oberweis Emerging and Mid 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 Oberweis Emerging with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oberweis Emerging and Mid Cap.
Diversification Opportunities for Oberweis Emerging and Mid Cap
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oberweis and Mid is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Oberweis Emerging Growth and Mid Cap 15x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap 15x 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap 15x has no effect on the direction of Oberweis Emerging i.e., Oberweis Emerging and Mid Cap go up and down completely randomly.
Pair Corralation between Oberweis Emerging and Mid Cap
Assuming the 90 days horizon Oberweis Emerging is expected to generate 2.28 times less return on investment than Mid Cap. But when comparing it to its historical volatility, Oberweis Emerging Growth is 1.36 times less risky than Mid Cap. It trades about 0.02 of its potential returns per unit of risk. Mid Cap 15x Strategy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,435 in Mid Cap 15x Strategy on October 11, 2024 and sell it today you would earn a total of 2,974 from holding Mid Cap 15x Strategy or generate 28.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oberweis Emerging Growth vs. Mid Cap 15x Strategy
Performance |
| Timeline |
| Oberweis Emerging Growth |
| Mid Cap 15x |
Oberweis Emerging and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oberweis Emerging and Mid Cap
The main advantage of trading using opposite Oberweis Emerging and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oberweis Emerging position performs unexpectedly, Mid 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 Mid Cap will offset losses from the drop in Mid Cap's long position.The idea behind Oberweis Emerging Growth and Mid Cap 15x Strategy 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.
| Mid Cap vs. Virtus Multi Strategy Target | Mid Cap vs. Calvert Emerging Markets | Mid Cap vs. Oberweis Emerging Growth | Mid Cap vs. Fidelity Series Emerging |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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