Correlation Between Oberweis Micro-cap and Oberweis International

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

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

Diversification Opportunities for Oberweis Micro-cap and Oberweis International

-0.59

Correlation Coefficient

Oberweis Micro-cap  Oberweis International

Excellent diversification

The 3 months correlation between Oberweis and Oberweis is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Oberweis Micro Cap Fund and Oberweis International Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis International and Oberweis Micro-cap 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 Micro Cap Fund 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 Oberweis Micro-cap i.e., Oberweis Micro-cap and Oberweis International go up and down completely randomly.

Pair Corralation between Oberweis Micro-cap and Oberweis International

Assuming the 90 days horizon Oberweis Micro Cap Fund is expected to under-perform the Oberweis International. In addition to that, Oberweis Micro-cap is 1.62 times more volatile than Oberweis International Opportunities. It trades about -0.12 of its total potential returns per unit of risk. Oberweis International Opportunities is currently generating about 0.09 per unit of volatility. If you would invest  1,856  in Oberweis International Opportunities on December 30, 2024 and sell it today you would earn a total of  103.00  from holding Oberweis International Opportunities or generate 5.55% return on investment over 90 days.

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

Oberweis Micro Cap Fund  vs.  Oberweis International Opportu

Oberweis Micro Cap

Risk-Adjusted Performance

Very Weak

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

Oberweis International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis International Opportunities are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Oberweis Micro-cap and Oberweis International

The main advantage of trading using opposite Oberweis Micro-cap and Oberweis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oberweis Micro-cap 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 Oberweis Micro Cap Fund 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.