Correlation Between Heartland Value and Oberweis Emerging

Can any of the company-specific risk be diversified away by investing in both Heartland Value 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 Heartland Value and Oberweis Emerging 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 Emerging Growth, you can compare the effects of market volatilities on Heartland Value 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 Heartland Value with a short position of Oberweis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and Oberweis Emerging.

Diversification Opportunities for Heartland Value and Oberweis Emerging

0.66

Correlation Coefficient

Heartland Value  Oberweis Emerging

Poor diversification

The 3 months correlation between Heartland and Oberweis is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Fund 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 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 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 Heartland Value i.e., Heartland Value and Oberweis Emerging go up and down completely randomly.

Pair Corralation between Heartland Value and Oberweis Emerging

Assuming the 90 days horizon Heartland Value is expected to generate 1.11 times less return on investment than Oberweis Emerging. In addition to that, Heartland Value is 1.01 times more volatile than Oberweis Emerging Growth. It trades about 0.02 of its total potential returns per unit of risk. Oberweis Emerging Growth is currently generating about 0.03 per unit of volatility. If you would invest  2,789  in Oberweis Emerging Growth on October 25, 2024 and sell it today you would earn a total of  336.00  from holding Oberweis Emerging Growth or generate 12.05% return on investment over 90 days.

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

Heartland Value Fund  vs.  Oberweis Emerging Growth

Heartland Value

Risk-Adjusted Performance

0 of 100

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 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 Heartland Value and Oberweis Emerging

The main advantage of trading using opposite Heartland Value and Oberweis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value 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 Heartland Value Fund 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..