Correlation Between Heartland Value and Oberweis China

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

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

Diversification Opportunities for Heartland Value and Oberweis China

-0.51

Correlation Coefficient

Heartland Value  Oberweis China

Excellent diversification

The 3 months correlation between Heartland and Oberweis is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Fund 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 Heartland 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 Heartland Value Fund 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 Heartland Value i.e., Heartland Value and Oberweis China go up and down completely randomly.

Pair Corralation between Heartland Value and Oberweis China

Assuming the 90 days horizon Heartland Value Fund is expected to under-perform the Oberweis China. But the mutual fund apears to be less risky and, when comparing its historical volatility, Heartland Value Fund is 1.83 times less risky than Oberweis China. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Oberweis China Opportunities is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  689.00  in Oberweis China Opportunities on December 31, 2024 and sell it today you would earn a total of  100.00  from holding Oberweis China Opportunities or generate 14.51% return on investment over 90 days.

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

Heartland Value Fund  vs.  Oberweis China Opportunities

Heartland Value

Risk-Adjusted Performance

Very Weak

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

Oberweis China Oppor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis China Opportunities are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Oberweis China showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heartland Value and Oberweis China

The main advantage of trading using opposite Heartland Value and Oberweis China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value 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 Heartland Value Fund 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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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..