Correlation Between Perritt Microcap and Oberweis Micro
Can any of the company-specific risk be diversified away by investing in both Perritt Microcap and Oberweis Micro 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 Perritt Microcap and Oberweis Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perritt Microcap Opportunities and Oberweis Micro Cap Fund, you can compare the effects of market volatilities on Perritt Microcap and Oberweis Micro 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 Perritt Microcap with a short position of Oberweis Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perritt Microcap and Oberweis Micro.
Diversification Opportunities for Perritt Microcap and Oberweis Micro
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Perritt and Oberweis is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Perritt Microcap Opportunities and Oberweis Micro Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Micro Cap and Perritt Microcap 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 Perritt Microcap Opportunities are associated (or correlated) with Oberweis Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Micro Cap has no effect on the direction of Perritt Microcap i.e., Perritt Microcap and Oberweis Micro go up and down completely randomly.
Pair Corralation between Perritt Microcap and Oberweis Micro
Assuming the 90 days horizon Perritt Microcap is expected to generate 3.28 times less return on investment than Oberweis Micro. In addition to that, Perritt Microcap is 1.19 times more volatile than Oberweis Micro Cap Fund. It trades about 0.06 of its total potential returns per unit of risk. Oberweis Micro Cap Fund is currently generating about 0.24 per unit of volatility. If you would invest 4,139 in Oberweis Micro Cap Fund on September 7, 2024 and sell it today you would earn a total of 845.00 from holding Oberweis Micro Cap Fund or generate 20.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Perritt Microcap Opportunities vs. Oberweis Micro Cap Fund
Performance |
Timeline |
Perritt Microcap Opp |
Oberweis Micro Cap |
Perritt Microcap and Oberweis Micro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Perritt Microcap and Oberweis Micro
The main advantage of trading using opposite Perritt Microcap and Oberweis Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perritt Microcap position performs unexpectedly, Oberweis Micro 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 Micro will offset losses from the drop in Oberweis Micro's long position.The idea behind Perritt Microcap Opportunities and Oberweis Micro Cap 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.Oberweis Micro vs. Oberweis Emerging Growth | Oberweis Micro vs. Oberweis Small Cap Opportunities | Oberweis Micro vs. Perritt Microcap Opportunities | Oberweis Micro vs. Kinetics Small Cap |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Stocks Directory Find actively traded stocks across global markets | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |