Correlation Between Vanguard Small-cap and Oberweis Micro-cap
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Oberweis Micro-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 Vanguard Small-cap and Oberweis Micro-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Growth and Oberweis Micro Cap Fund, you can compare the effects of market volatilities on Vanguard Small-cap and Oberweis Micro-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 Vanguard Small-cap with a short position of Oberweis Micro-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Oberweis Micro-cap.
Diversification Opportunities for Vanguard Small-cap and Oberweis Micro-cap
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Oberweis is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Oberweis Micro Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Micro Cap and Vanguard Small-cap 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 Vanguard Small Cap Growth are associated (or correlated) with Oberweis Micro-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Micro Cap has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Oberweis Micro-cap go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Oberweis Micro-cap
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 1.06 times less return on investment than Oberweis Micro-cap. But when comparing it to its historical volatility, Vanguard Small Cap Growth is 1.19 times less risky than Oberweis Micro-cap. It trades about 0.35 of its potential returns per unit of risk. Oberweis Micro Cap Fund is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,442 in Oberweis Micro Cap Fund on August 30, 2024 and sell it today you would earn a total of 486.00 from holding Oberweis Micro Cap Fund or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Oberweis Micro Cap Fund
Performance |
| Timeline |
| Vanguard Small Cap |
| Oberweis Micro Cap |
Vanguard Small-cap and Oberweis Micro-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Oberweis Micro-cap
The main advantage of trading using opposite Vanguard Small-cap and Oberweis Micro-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Oberweis Micro-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 Oberweis Micro-cap will offset losses from the drop in Oberweis Micro-cap's long position.| Vanguard Small-cap vs. Vanguard Mid Cap Growth | Vanguard Small-cap vs. Vanguard Small Cap Value | Vanguard Small-cap vs. Vanguard Growth Index | Vanguard Small-cap vs. Vanguard Mid Cap Value |
| Oberweis Micro-cap vs. Putnam Equity Income | Oberweis Micro-cap vs. Putnam Growth Opportunities | Oberweis Micro-cap vs. HUMANA INC | Oberweis Micro-cap vs. Aquagold International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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