Correlation Between Mfs International and Oberweis International

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

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

Diversification Opportunities for Mfs International and Oberweis International

0.88

Correlation Coefficient

Mfs International  Oberweis International

Very poor diversification

The 3 months correlation between Mfs and Oberweis is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International New and Oberweis International Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis International and Mfs 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 Mfs International New are associated (or correlated) with Oberweis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis International has no effect on the direction of Mfs International i.e., Mfs International and Oberweis International go up and down completely randomly.

Pair Corralation between Mfs International and Oberweis International

Assuming the 90 days horizon Mfs International is expected to generate 1.66 times less return on investment than Oberweis International. But when comparing it to its historical volatility, Mfs International New is 1.56 times less risky than Oberweis International. It trades about 0.08 of its potential returns per unit of risk. Oberweis International Opportunities is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  890.00  in Oberweis International Opportunities on December 29, 2024 and sell it today you would earn a total of  50.00  from holding Oberweis International Opportunities or generate 5.62% return on investment over 90 days.

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

Mfs International New  vs.  Oberweis International Opportu

Mfs International New

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs International New are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mfs International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oberweis International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis International Opportunities are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Oberweis International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mfs International and Oberweis International

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

The idea behind Mfs International New and Oberweis International 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.