Correlation Between Amcap Fund and Oberweis Emerging

Can any of the company-specific risk be diversified away by investing in both Amcap Fund 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 Amcap Fund and Oberweis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amcap Fund Class and Oberweis Emerging Growth, you can compare the effects of market volatilities on Amcap Fund 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 Amcap Fund with a short position of Oberweis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcap Fund and Oberweis Emerging.

Diversification Opportunities for Amcap Fund and Oberweis Emerging

0.8

Correlation Coefficient

Amcap Fund  Oberweis Emerging

Very poor diversification

The 3 months correlation between Amcap and Oberweis is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class 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 Amcap Fund 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 Amcap Fund Class 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 Amcap Fund i.e., Amcap Fund and Oberweis Emerging go up and down completely randomly.

Pair Corralation between Amcap Fund and Oberweis Emerging

Assuming the 90 days horizon Amcap Fund is expected to generate 6.49 times less return on investment than Oberweis Emerging. But when comparing it to its historical volatility, Amcap Fund Class is 1.07 times less risky than Oberweis Emerging. It trades about 0.01 of its potential returns per unit of risk. Oberweis Emerging Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,000  in Oberweis Emerging Growth on October 25, 2024 and sell it today you would earn a total of  125.00  from holding Oberweis Emerging Growth or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Amcap Fund Class  vs.  Oberweis Emerging Growth

Amcap Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amcap Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Amcap Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oberweis Emerging Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis Emerging Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Oberweis Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amcap Fund and Oberweis Emerging

The main advantage of trading using opposite Amcap Fund and Oberweis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund 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 Amcap Fund Class and Oberweis Emerging Growth 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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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.