Correlation Between Cisco Systems and Oberweis Small-Cap

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

Diversification Opportunities for Cisco Systems and Oberweis Small-Cap

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Cisco and Oberweis is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems 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 Cisco Systems 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 Cisco Systems 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 Cisco Systems i.e., Cisco Systems and Oberweis Small-Cap go up and down completely randomly.

Pair Corralation between Cisco Systems and Oberweis Small-Cap

Given the investment horizon of 90 days Cisco Systems is expected to under-perform the Oberweis Small-Cap. But the stock apears to be less risky and, when comparing its historical volatility, Cisco Systems is 1.07 times less risky than Oberweis Small-Cap. The stock trades about -0.18 of its potential returns per unit of risk. The Oberweis Small-Cap Opportunities is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,863  in Oberweis Small-Cap Opportunities on July 9, 2022 and sell it today you would lose (11.00)  from holding Oberweis Small-Cap Opportunities or give up 0.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.65%
ValuesDaily Returns

Cisco Systems  vs.  Oberweis Small-Cap Opportuniti

 Performance (%) 
       Timeline  
Cisco Systems 
Cisco Performance
0 of 100
Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Cisco Systems is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cisco Price Channel

Oberweis Small-Cap 
Oberweis Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis Small-Cap Opportunities are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oberweis Small-Cap may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Oberweis Price Channel

Cisco Systems and Oberweis Small-Cap Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cisco Systems and Oberweis Small-Cap

The main advantage of trading using opposite Cisco Systems and Oberweis Small-Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems 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.
Cisco Systems vs. Amazon Inc
The idea behind Cisco Systems 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 vs. Vanguard Explorer
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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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