Correlation Between Victory Rs and Oberweis Micro-cap

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

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

Diversification Opportunities for Victory Rs and Oberweis Micro-cap

0.84

Correlation Coefficient

Victory Rs  Oberweis Micro-cap

Very poor diversification

The 3 months correlation between Victory and Oberweis is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Victory Rs Value and Oberweis Micro Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Micro Cap and Victory Rs 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 Victory Rs Value are associated (or correlated) with Oberweis Micro-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Micro Cap has no effect on the direction of Victory Rs i.e., Victory Rs and Oberweis Micro-cap go up and down completely randomly.

Pair Corralation between Victory Rs and Oberweis Micro-cap

Assuming the 90 days horizon Victory Rs Value is expected to generate 0.47 times more return on investment than Oberweis Micro-cap. However, Victory Rs Value is 2.14 times less risky than Oberweis Micro-cap. It trades about -0.03 of its potential returns per unit of risk. Oberweis Micro Cap Fund is currently generating about -0.12 per unit of risk. If you would invest  2,484  in Victory Rs Value on December 30, 2024 and sell it today you would lose (46.00) from holding Victory Rs Value or give up 1.85% of portfolio value over 90 days.

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

Victory Rs Value  vs.  Oberweis Micro Cap Fund

Victory Rs Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Rs Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Victory Rs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Victory Rs and Oberweis Micro-cap

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

The idea behind Victory Rs Value and Oberweis Micro Cap Fund 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.