Correlation Between Wasatch International and Oberweis China
Can any of the company-specific risk be diversified away by investing in both Wasatch International and Oberweis China 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 Wasatch International and Oberweis China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch International Growth and Oberweis China Opportunities, you can compare the effects of market volatilities on Wasatch International and Oberweis China 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 Wasatch International with a short position of Oberweis China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch International and Oberweis China.
Diversification Opportunities for Wasatch International and Oberweis China
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wasatch and Oberweis is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch International Growth and Oberweis China Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis China Oppor and Wasatch 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 Wasatch International Growth are associated (or correlated) with Oberweis China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis China Oppor has no effect on the direction of Wasatch International i.e., Wasatch International and Oberweis China go up and down completely randomly.
Pair Corralation between Wasatch International and Oberweis China
Assuming the 90 days horizon Wasatch International Growth is expected to generate 0.68 times more return on investment than Oberweis China. However, Wasatch International Growth is 1.47 times less risky than Oberweis China. It trades about 0.05 of its potential returns per unit of risk. Oberweis China Opportunities is currently generating about 0.01 per unit of risk. If you would invest 2,226 in Wasatch International Growth on September 3, 2024 and sell it today you would earn a total of 320.00 from holding Wasatch International Growth or generate 14.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch International Growth vs. Oberweis China Opportunities
Performance |
| Timeline |
| Wasatch International |
| Oberweis China Oppor |
Wasatch International and Oberweis China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch International and Oberweis China
The main advantage of trading using opposite Wasatch International and Oberweis China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch International position performs unexpectedly, Oberweis China 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 China will offset losses from the drop in Oberweis China's long position.The idea behind Wasatch International Growth and Oberweis China Opportunities 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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