Correlation Between California High-yield and Oppenheimer International
Can any of the company-specific risk be diversified away by investing in both California High-yield and Oppenheimer International 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 California High-yield and Oppenheimer International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Oppenheimer International Diversified, you can compare the effects of market volatilities on California High-yield and Oppenheimer International 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 California High-yield with a short position of Oppenheimer International. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Oppenheimer International.
Diversification Opportunities for California High-yield and Oppenheimer International
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between California and Oppenheimer is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Oppenheimer International Dive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer International and California High-yield 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 California High Yield Municipal are associated (or correlated) with Oppenheimer International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer International has no effect on the direction of California High-yield i.e., California High-yield and Oppenheimer International go up and down completely randomly.
Pair Corralation between California High-yield and Oppenheimer International
Assuming the 90 days horizon California High Yield Municipal is expected to generate 0.38 times more return on investment than Oppenheimer International. However, California High Yield Municipal is 2.63 times less risky than Oppenheimer International. It trades about -0.05 of its potential returns per unit of risk. Oppenheimer International Diversified is currently generating about -0.23 per unit of risk. If you would invest 983.00 in California High Yield Municipal on October 14, 2024 and sell it today you would lose (10.00) from holding California High Yield Municipal or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Oppenheimer International Dive
Performance |
| Timeline |
| California High Yield |
| Oppenheimer International |
California High-yield and Oppenheimer International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Oppenheimer International
The main advantage of trading using opposite California High-yield and Oppenheimer International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Oppenheimer International 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 Oppenheimer International will offset losses from the drop in Oppenheimer International's long position.The idea behind California High Yield Municipal and Oppenheimer International Diversified 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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