Correlation Between Blackrock International and Oberweis Micro

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

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

Diversification Opportunities for Blackrock International and Oberweis Micro

-0.57

Correlation Coefficient

Blackrock International  Oberweis Micro

Excellent diversification

The 3 months correlation between Blackrock and Oberweis is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock International Index 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 Blackrock 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 Blackrock International Index are associated (or correlated) with Oberweis Micro. 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 Blackrock International i.e., Blackrock International and Oberweis Micro go up and down completely randomly.

Pair Corralation between Blackrock International and Oberweis Micro

Assuming the 90 days horizon Blackrock International Index is expected to under-perform the Oberweis Micro. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock International Index is 1.54 times less risky than Oberweis Micro. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Oberweis Micro Cap Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,223  in Oberweis Micro Cap Fund on September 2, 2024 and sell it today you would earn a total of  714.00  from holding Oberweis Micro Cap Fund or generate 16.91% return on investment over 90 days.

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

Blackrock International Index  vs.  Oberweis Micro Cap Fund

Blackrock International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock International Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Blackrock International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oberweis Micro Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis Micro Cap Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Oberweis Micro showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock International and Oberweis Micro

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

The idea behind Blackrock International Index and Oberweis Micro Cap Fund 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.