Correlation Between Heartland Value and Oberweis Micro

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

Diversification Opportunities for Heartland Value and Oberweis Micro

0.97

Correlation Coefficient

Heartland Value  Oberweis Micro

Almost no diversification

The 3 months correlation between Heartland and Oberweis is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Fund 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 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 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 Heartland Value i.e., Heartland Value and Oberweis Micro go up and down completely randomly.

Pair Corralation between Heartland Value and Oberweis Micro

Assuming the 90 days horizon Heartland Value is expected to generate 1.24 times less return on investment than Oberweis Micro. But when comparing it to its historical volatility, Heartland Value Fund is 1.19 times less risky than Oberweis Micro. It trades about 0.19 of its potential returns per unit of risk. 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 Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Heartland Value Fund  vs.  Oberweis Micro Cap Fund

Heartland Value

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Value Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Heartland Value showed solid returns over the last few months and may actually be approaching a breakup point.

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 Heartland Value and Oberweis Micro

The main advantage of trading using opposite Heartland Value and Oberweis Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value 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 Heartland Value Fund 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.