Correlation Between DOW and Oberweis Small-Cap

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Can any of the company-specific risk be diversified away by investing in both DOW and Oberweis Small-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 DOW and Oberweis Small-Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DOW and Oberweis Small-Cap Opportunities, you can compare the effects of market volatilities on DOW and Oberweis Small-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 DOW with a short position of Oberweis Small-Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of DOW and Oberweis Small-Cap.

Diversification Opportunities for DOW and Oberweis Small-Cap

0.0
  Correlation Coefficient

Pay attention - limited upside

The 1 month correlation between DOW and Oberweis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DOW and Oberweis Small-Cap Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Small-Cap and DOW 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 DOW are associated (or correlated) with Oberweis Small-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 Small-Cap has no effect on the direction of DOW i.e., DOW and Oberweis Small-Cap go up and down completely randomly.
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Pair Corralation between DOW and Oberweis Small-Cap

If you would invest  3,077,279  in DOW on May 14, 2022 and sell it today you would earn a total of  256,388  from holding DOW or generate 8.33% return on investment over 90 days.
Time Period1 Month [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

DOW  vs.  Oberweis Small-Cap Opportuniti

 Performance (%) 
       Timeline  

DOW and Oberweis Small-Cap Volatility Contrast

   Predicted Return Density   
       Returns  

DOW

Pair trading matchups for DOW

GM vs. DOW
B of A vs. DOW
Alphabet vs. DOW
Citigroup vs. DOW
Vmware vs. DOW
Grayscale Ethereum vs. DOW
Visa vs. DOW
Ford vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.

Oberweis Small-Cap Opportunities

Pair trading matchups for Oberweis Small-Cap

Citigroup vs. Oberweis Small-Cap
Grayscale Ethereum vs. Oberweis Small-Cap
Twitter vs. Oberweis Small-Cap
GM vs. Oberweis Small-Cap
Visa vs. Oberweis Small-Cap
Vmware vs. Oberweis Small-Cap
B of A vs. Oberweis Small-Cap
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Oberweis Small-Cap as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Oberweis Small-Cap's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Oberweis Small-Cap's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Oberweis Small-Cap Opportunities.

Pair Trading with DOW and Oberweis Small-Cap

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

DOW

Pair trading matchups for DOW

Citigroup vs. DOW
Crescent vs. DOW
Visa vs. DOW
Microsoft Corp vs. DOW
Alphabet vs. DOW
Grayscale Ethereum vs. DOW
Alphabet vs. DOW
GM vs. DOW
Vmware vs. DOW
Twitter vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.
The idea behind DOW and Oberweis Small-Cap 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.

Oberweis Small-Cap Opportunities

Pair trading matchups for Oberweis Small-Cap

Visa vs. Oberweis Small-Cap
Vmware vs. Oberweis Small-Cap
GM vs. Oberweis Small-Cap
B of A vs. Oberweis Small-Cap
Twitter vs. Oberweis Small-Cap
Citigroup vs. Oberweis Small-Cap
Alphabet vs. Oberweis Small-Cap
Microsoft Corp vs. Oberweis Small-Cap
Grayscale Ethereum vs. Oberweis Small-Cap
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Oberweis Small-Cap as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Oberweis Small-Cap's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Oberweis Small-Cap's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Oberweis Small-Cap Opportunities.
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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