Correlation Between Needham Aggressive and Oberweis Small-cap

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

Diversification Opportunities for Needham Aggressive and Oberweis Small-cap

0.93

Correlation Coefficient

Needham Aggressive  Oberweis Small-cap

Almost no diversification

The 3 months correlation between Needham and Oberweis is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth 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 Needham Aggressive 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 Needham Aggressive Growth 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 Needham Aggressive i.e., Needham Aggressive and Oberweis Small-cap go up and down completely randomly.

Pair Corralation between Needham Aggressive and Oberweis Small-cap

Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 1.15 times more return on investment than Oberweis Small-cap. However, Needham Aggressive is 1.15 times more volatile than Oberweis Small Cap Opportunities. It trades about 0.16 of its potential returns per unit of risk. Oberweis Small Cap Opportunities is currently generating about 0.16 per unit of risk. If you would invest  4,308  in Needham Aggressive Growth on September 7, 2024 and sell it today you would earn a total of  587.00  from holding Needham Aggressive Growth or generate 13.63% return on investment over 90 days.

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

Needham Aggressive Growth  vs.  Oberweis Small Cap Opportuniti

Needham Aggressive Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Aggressive Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Needham Aggressive showed solid returns over the last few months and may actually be approaching a breakup point.

Oberweis Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis Small Cap Opportunities are ranked lower than 12 (%) 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 January 2025.

Pair Trading with Needham Aggressive and Oberweis Small-cap

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

The idea behind Needham Aggressive Growth 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.