Correlation Between Ishares Municipal and Oppenheimer Corporate
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Oppenheimer Corporate 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 Ishares Municipal and Oppenheimer Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Oppenheimer Corporate Bd, you can compare the effects of market volatilities on Ishares Municipal and Oppenheimer Corporate 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 Ishares Municipal with a short position of Oppenheimer Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Oppenheimer Corporate.
Diversification Opportunities for Ishares Municipal and Oppenheimer Corporate
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ishares and Oppenheimer is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Oppenheimer Corporate Bd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Corporate and Ishares Municipal 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 Ishares Municipal Bond are associated (or correlated) with Oppenheimer Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Corporate has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Oppenheimer Corporate go up and down completely randomly.
Pair Corralation between Ishares Municipal and Oppenheimer Corporate
Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 0.35 times more return on investment than Oppenheimer Corporate. However, Ishares Municipal Bond is 2.84 times less risky than Oppenheimer Corporate. It trades about 0.56 of its potential returns per unit of risk. Oppenheimer Corporate Bd is currently generating about 0.14 per unit of risk. If you would invest 1,106 in Ishares Municipal Bond on September 12, 2024 and sell it today you would earn a total of 14.00 from holding Ishares Municipal Bond or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Oppenheimer Corporate Bd
Performance |
| Timeline |
| Ishares Municipal Bond |
| Oppenheimer Corporate |
Ishares Municipal and Oppenheimer Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Oppenheimer Corporate
The main advantage of trading using opposite Ishares Municipal and Oppenheimer Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Oppenheimer Corporate 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 Corporate will offset losses from the drop in Oppenheimer Corporate's long position.The idea behind Ishares Municipal Bond and Oppenheimer Corporate Bd 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.
| Oppenheimer Corporate vs. T Rowe Price | Oppenheimer Corporate vs. Counterpoint Tactical Municipal | Oppenheimer Corporate vs. Ishares Municipal Bond | Oppenheimer Corporate vs. Ab Impact Municipal |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |