Correlation Between Oberweis Emerging and American Funds

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

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

Diversification Opportunities for Oberweis Emerging and American Funds

-0.59

Correlation Coefficient

Oberweis Emerging  American Funds

Excellent diversification

The 3 months correlation between Oberweis and American is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Oberweis Emerging Growth and American Funds International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inter and Oberweis Emerging 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 Oberweis Emerging Growth are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Inter has no effect on the direction of Oberweis Emerging i.e., Oberweis Emerging and American Funds go up and down completely randomly.

Pair Corralation between Oberweis Emerging and American Funds

Assuming the 90 days horizon Oberweis Emerging Growth is expected to under-perform the American Funds. In addition to that, Oberweis Emerging is 1.73 times more volatile than American Funds International. It trades about -0.08 of its total potential returns per unit of risk. American Funds International is currently generating about 0.18 per unit of volatility. If you would invest  1,632  in American Funds International on December 22, 2024 and sell it today you would earn a total of  149.00  from holding American Funds International or generate 9.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Oberweis Emerging Growth  vs.  American Funds International

Oberweis Emerging Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oberweis Emerging Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

American Funds Inter

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds International are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, American Funds may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Oberweis Emerging and American Funds

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

The idea behind Oberweis Emerging Growth and American Funds International 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 CEOs Directory module to screen CEOs from public companies around the world.