Correlation Between OBERWEIS SMALL-CAP and VANGUARD EXPLORER

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Can any of the company-specific risk be diversified away by investing in both OBERWEIS SMALL-CAP and VANGUARD EXPLORER 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 VANGUARD EXPLORER 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 VANGUARD EXPLORER FUND, you can compare the effects of market volatilities on OBERWEIS SMALL-CAP and VANGUARD EXPLORER 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 VANGUARD EXPLORER. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBERWEIS SMALL-CAP and VANGUARD EXPLORER.

Diversification Opportunities for OBERWEIS SMALL-CAP and VANGUARD EXPLORER

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between OBERWEIS and VANGUARD is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding OBERWEIS SMALL-CAP OPPORTUNITI and VANGUARD EXPLORER FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VANGUARD EXPLORER FUND 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 VANGUARD EXPLORER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VANGUARD EXPLORER FUND has no effect on the direction of OBERWEIS SMALL-CAP i.e., OBERWEIS SMALL-CAP and VANGUARD EXPLORER go up and down completely randomly.

Pair Corralation between OBERWEIS SMALL-CAP and VANGUARD EXPLORER

Assuming the 90 days horizon OBERWEIS SMALL-CAP OPPORTUNITIES is expected to generate 1.16 times more return on investment than VANGUARD EXPLORER. However, OBERWEIS SMALL-CAP is 1.16 times more volatile than VANGUARD EXPLORER FUND. It trades about 0.05 of its potential returns per unit of risk. VANGUARD EXPLORER FUND is currently generating about 0.0 per unit of risk. If you would invest  1,479  in OBERWEIS SMALL-CAP OPPORTUNITIES on September 6, 2022 and sell it today you would earn a total of  589.00  from holding OBERWEIS SMALL-CAP OPPORTUNITIES or generate 39.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

OBERWEIS SMALL-CAP OPPORTUNITI  vs.  VANGUARD EXPLORER FUND

 Performance (%) 
       Timeline  
OBERWEIS SMALL-CAP 
OBERWEIS Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in OBERWEIS SMALL-CAP OPPORTUNITIES are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, OBERWEIS SMALL-CAP showed solid returns over the last few months and may actually be approaching a breakup point.

OBERWEIS Price Channel

VANGUARD EXPLORER FUND 
VANGUARD Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in VANGUARD EXPLORER FUND are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, VANGUARD EXPLORER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VANGUARD Price Channel

OBERWEIS SMALL-CAP and VANGUARD EXPLORER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with OBERWEIS SMALL-CAP and VANGUARD EXPLORER

The main advantage of trading using opposite OBERWEIS SMALL-CAP and VANGUARD EXPLORER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBERWEIS SMALL-CAP position performs unexpectedly, VANGUARD EXPLORER 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 VANGUARD EXPLORER will offset losses from the drop in VANGUARD EXPLORER's long position.
OBERWEIS SMALL-CAP vs. Nordea Bank Abp
The idea behind OBERWEIS SMALL-CAP OPPORTUNITIES and VANGUARD EXPLORER 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.
VANGUARD EXPLORER vs. Nordea Bank Abp
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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