Correlation Between Oberweis Small-Cap and Coca Cola

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

Diversification Opportunities for Oberweis Small-Cap and Coca Cola

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Oberweis and Coca Cola is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Oberweis Small-Cap Opportuniti and Coca-Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca-Cola and Oberweis Small-Cap 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 Oberweis Small-Cap Opportunities are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca-Cola has no effect on the direction of Oberweis Small-Cap i.e., Oberweis Small-Cap and Coca Cola go up and down completely randomly.

Pair Corralation between Oberweis Small-Cap and Coca Cola

Assuming the 90 days horizon Oberweis Small-Cap Opportunities is expected to generate 1.41 times more return on investment than Coca Cola. However, Oberweis Small-Cap is 1.41 times more volatile than Coca-Cola. It trades about 0.12 of its potential returns per unit of risk. Coca-Cola is currently generating about 0.0 per unit of risk. If you would invest  1,703  in Oberweis Small-Cap Opportunities on May 12, 2022 and sell it today you would earn a total of  254.00  from holding Oberweis Small-Cap Opportunities or generate 14.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.39%
ValuesDaily Returns

Oberweis Small-Cap Opportuniti  vs.  Coca-Cola

 Performance (%) 
       Timeline  
Oberweis Small-Cap 
Oberweis Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis Small-Cap Opportunities are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly conflicting basic indicators, Oberweis Small-Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Oberweis Price Channel

Coca-Cola 
Coca Cola Performance
0 of 100
Over the last 90 days Coca-Cola has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Coca Cola is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Coca Cola Price Channel

Oberweis Small-Cap and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oberweis Small-Cap and Coca Cola

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

Oberweis Small-Cap Opportunities

Pair trading matchups for Oberweis Small-Cap

The idea behind Oberweis Small-Cap Opportunities and Coca-Cola 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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