Correlation Between Osterweis Strategic and Osterweis Emerging
Can any of the company-specific risk be diversified away by investing in both Osterweis Strategic and Osterweis 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 Osterweis Strategic and Osterweis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Osterweis Strategic Investment and Osterweis Emerging Opportunity, you can compare the effects of market volatilities on Osterweis Strategic and Osterweis 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 Osterweis Strategic with a short position of Osterweis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osterweis Strategic and Osterweis Emerging.
Diversification Opportunities for Osterweis Strategic and Osterweis Emerging
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Osterweis and Osterweis is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Osterweis Strategic Investment and Osterweis Emerging Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osterweis Emerging and Osterweis Strategic 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 Osterweis Strategic Investment are associated (or correlated) with Osterweis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osterweis Emerging has no effect on the direction of Osterweis Strategic i.e., Osterweis Strategic and Osterweis Emerging go up and down completely randomly.
Pair Corralation between Osterweis Strategic and Osterweis Emerging
Assuming the 90 days horizon Osterweis Strategic is expected to generate 2.1 times less return on investment than Osterweis Emerging. But when comparing it to its historical volatility, Osterweis Strategic Investment is 2.29 times less risky than Osterweis Emerging. It trades about 0.09 of its potential returns per unit of risk. Osterweis Emerging Opportunity is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,204 in Osterweis Emerging Opportunity on August 26, 2024 and sell it today you would earn a total of 658.00 from holding Osterweis Emerging Opportunity or generate 54.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Osterweis Strategic Investment vs. Osterweis Emerging Opportunity
Performance |
| Timeline |
| Osterweis Strategic |
| Osterweis Emerging |
Osterweis Strategic and Osterweis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Osterweis Strategic and Osterweis Emerging
The main advantage of trading using opposite Osterweis Strategic and Osterweis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osterweis Strategic position performs unexpectedly, Osterweis 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 Osterweis Emerging will offset losses from the drop in Osterweis Emerging's long position.The idea behind Osterweis Strategic Investment and Osterweis Emerging Opportunity 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.
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |