Correlation Between Adams Natural and Oberweis Funds

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

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

Diversification Opportunities for Adams Natural and Oberweis Funds

0.35

Correlation Coefficient

Adams Natural  Oberweis Funds

Weak diversification

The 3 months correlation between Adams and Oberweis is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Oberweis Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Funds and Adams Natural 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 Adams Natural Resources are associated (or correlated) with Oberweis Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Funds has no effect on the direction of Adams Natural i.e., Adams Natural and Oberweis Funds go up and down completely randomly.

Pair Corralation between Adams Natural and Oberweis Funds

Considering the 90-day investment horizon Adams Natural is expected to generate 1.89 times less return on investment than Oberweis Funds. In addition to that, Adams Natural is 1.12 times more volatile than Oberweis Funds . It trades about 0.11 of its total potential returns per unit of risk. Oberweis Funds is currently generating about 0.24 per unit of volatility. If you would invest  971.00  in Oberweis Funds on December 28, 2024 and sell it today you would earn a total of  159.00  from holding Oberweis Funds or generate 16.37% return on investment over 90 days.

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

Adams Natural Resources  vs.  Oberweis Funds

Adams Natural Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adams Natural Resources are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of very fragile technical and fundamental indicators, Adams Natural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Oberweis Funds

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis Funds are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Oberweis Funds showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adams Natural and Oberweis Funds

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

The idea behind Adams Natural Resources and Oberweis Funds 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.