Correlation Between Prudential Financial and Oberweis Funds

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

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

Diversification Opportunities for Prudential Financial and Oberweis Funds

0.43

Correlation Coefficient

Prudential Financial  Oberweis Funds

Very weak diversification

The 3 months correlation between Prudential and Oberweis is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial Services and Oberweis Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Funds and Prudential Financial 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 Prudential Financial Services 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 Prudential Financial i.e., Prudential Financial and Oberweis Funds go up and down completely randomly.

Pair Corralation between Prudential Financial and Oberweis Funds

Assuming the 90 days horizon Prudential Financial Services is expected to under-perform the Oberweis Funds. In addition to that, Prudential Financial is 1.45 times more volatile than Oberweis Funds . It trades about -0.09 of its total potential returns per unit of risk. Oberweis Funds is currently generating about 0.17 per unit of volatility. If you would invest  999.00  in Oberweis Funds on December 2, 2024 and sell it today you would earn a total of  88.00  from holding Oberweis Funds or generate 8.81% return on investment over 90 days.

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

Prudential Financial Services  vs.  Oberweis Funds

Prudential Financial

Risk-Adjusted Performance

Very Weak

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

Oberweis Funds

Risk-Adjusted Performance

Good

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

Pair Trading with Prudential Financial and Oberweis Funds

The main advantage of trading using opposite Prudential Financial and Oberweis Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial 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 Prudential Financial Services 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.