Correlation Between Aegis Value and Oberweis Small

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

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

Diversification Opportunities for Aegis Value and Oberweis Small

0.58

Correlation Coefficient

Aegis Value  Oberweis Small

Very weak diversification

The 3 months correlation between Aegis and Oberweis is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aegis Value Fund and Oberweis Small Cap Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Small Cap and Aegis Value 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 Aegis Value Fund are associated (or correlated) with Oberweis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Small Cap has no effect on the direction of Aegis Value i.e., Aegis Value and Oberweis Small go up and down completely randomly.

Pair Corralation between Aegis Value and Oberweis Small

Assuming the 90 days horizon Aegis Value Fund is expected to under-perform the Oberweis Small. In addition to that, Aegis Value is 1.24 times more volatile than Oberweis Small Cap Opportunities. It trades about -0.08 of its total potential returns per unit of risk. Oberweis Small Cap Opportunities is currently generating about -0.09 per unit of volatility. If you would invest  2,729  in Oberweis Small Cap Opportunities on November 29, 2024 and sell it today you would lose (180.00) from holding Oberweis Small Cap Opportunities or give up 6.6% of portfolio value over 90 days.

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

Aegis Value Fund  vs.  Oberweis Small Cap Opportuniti

Aegis Value Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aegis Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Oberweis Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oberweis Small Cap Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Aegis Value and Oberweis Small

The main advantage of trading using opposite Aegis Value and Oberweis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegis Value position performs unexpectedly, Oberweis Small 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 Small will offset losses from the drop in Oberweis Small's long position.

The idea behind Aegis Value Fund and Oberweis Small Cap 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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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.