Correlation Between Invesco Steelpath and Oberweis Micro-cap

Can any of the company-specific risk be diversified away by investing in both Invesco Steelpath 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 Invesco Steelpath 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 Invesco Steelpath Mlp and Oberweis Micro Cap Fund, you can compare the effects of market volatilities on Invesco Steelpath 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 Invesco Steelpath with a short position of Oberweis Micro-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Steelpath and Oberweis Micro-cap.

Diversification Opportunities for Invesco Steelpath and Oberweis Micro-cap

0.04

Correlation Coefficient

Invesco Steelpath  Oberweis Micro-cap

Significant diversification

The 3 months correlation between Invesco and Oberweis is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Steelpath Mlp 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 Invesco Steelpath 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 Invesco Steelpath Mlp 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 Invesco Steelpath i.e., Invesco Steelpath and Oberweis Micro-cap go up and down completely randomly.

Pair Corralation between Invesco Steelpath and Oberweis Micro-cap

Assuming the 90 days horizon Invesco Steelpath Mlp is expected to generate 0.87 times more return on investment than Oberweis Micro-cap. However, Invesco Steelpath Mlp is 1.15 times less risky than Oberweis Micro-cap. It trades about 0.11 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  605.00  in Invesco Steelpath Mlp on December 30, 2024 and sell it today you would earn a total of  60.00  from holding Invesco Steelpath Mlp or generate 9.92% return on investment over 90 days.

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

Invesco Steelpath Mlp  vs.  Oberweis Micro Cap Fund

Invesco Steelpath Mlp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Steelpath Mlp are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco Steelpath may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Invesco Steelpath and Oberweis Micro-cap

The main advantage of trading using opposite Invesco Steelpath and Oberweis Micro-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Steelpath 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 Invesco Steelpath Mlp 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.