Correlation Between Oberweis International and Oberweis Emerging
Can any of the company-specific risk be diversified away by investing in both Oberweis International and Oberweis Emerging 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 International and Oberweis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oberweis International Opportunities and Oberweis Emerging Markets, you can compare the effects of market volatilities on Oberweis International and Oberweis Emerging 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 International with a short position of Oberweis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oberweis International and Oberweis Emerging.
Diversification Opportunities for Oberweis International and Oberweis Emerging
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oberweis and Oberweis is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Oberweis International Opportu and Oberweis Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Emerging Markets and Oberweis International 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 International Opportunities are associated (or correlated) with Oberweis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Emerging Markets has no effect on the direction of Oberweis International i.e., Oberweis International and Oberweis Emerging go up and down completely randomly.
Pair Corralation between Oberweis International and Oberweis Emerging
Assuming the 90 days horizon Oberweis International Opportunities is expected to generate 0.46 times more return on investment than Oberweis Emerging. However, Oberweis International Opportunities is 2.17 times less risky than Oberweis Emerging. It trades about 0.01 of its potential returns per unit of risk. Oberweis Emerging Markets is currently generating about -0.05 per unit of risk. If you would invest 1,912 in Oberweis International Opportunities on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Oberweis International Opportunities or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Oberweis International Opportu vs. Oberweis Emerging Markets
Performance |
| Timeline |
| Oberweis International |
| Oberweis Emerging Markets |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Oberweis International and Oberweis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oberweis International and Oberweis Emerging
The main advantage of trading using opposite Oberweis International and Oberweis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oberweis International position performs unexpectedly, Oberweis Emerging 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 Emerging will offset losses from the drop in Oberweis Emerging's long position.The idea behind Oberweis International Opportunities and Oberweis Emerging Markets 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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