Correlation Between Smallcap World and Oberweis Emerging
Can any of the company-specific risk be diversified away by investing in both Smallcap World 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 Smallcap World and Oberweis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap World Fund and Oberweis Emerging Growth, you can compare the effects of market volatilities on Smallcap World 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 Smallcap World with a short position of Oberweis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap World and Oberweis Emerging.
Diversification Opportunities for Smallcap World and Oberweis Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Oberweis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund and Oberweis Emerging Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Emerging Growth and Smallcap World 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 Smallcap World Fund 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 Growth has no effect on the direction of Smallcap World i.e., Smallcap World and Oberweis Emerging go up and down completely randomly.
Pair Corralation between Smallcap World and Oberweis Emerging
Assuming the 90 days horizon Smallcap World is expected to generate 1.68 times less return on investment than Oberweis Emerging. But when comparing it to its historical volatility, Smallcap World Fund is 1.4 times less risky than Oberweis Emerging. It trades about 0.06 of its potential returns per unit of risk. Oberweis Emerging Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,803 in Oberweis Emerging Growth on September 1, 2024 and sell it today you would earn a total of 331.00 from holding Oberweis Emerging Growth or generate 11.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Smallcap World Fund vs. Oberweis Emerging Growth
Performance |
| Timeline |
| Smallcap World |
| Oberweis Emerging Growth |
Smallcap World and Oberweis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap World and Oberweis Emerging
The main advantage of trading using opposite Smallcap World and Oberweis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap World 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.| Smallcap World vs. Small Midcap Dividend Income | Smallcap World vs. Fisher Small Cap | Smallcap World vs. T Rowe Price | Smallcap World vs. Us Small Cap |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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