Correlation Between Federated Institutional and Oppenheimer Intl
Can any of the company-specific risk be diversified away by investing in both Federated Institutional and Oppenheimer Intl 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 Federated Institutional and Oppenheimer Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Institutional High and Oppenheimer Intl Small, you can compare the effects of market volatilities on Federated Institutional and Oppenheimer Intl 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 Federated Institutional with a short position of Oppenheimer Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Institutional and Oppenheimer Intl.
Diversification Opportunities for Federated Institutional and Oppenheimer Intl
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and Oppenheimer is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Federated Institutional High and Oppenheimer Intl Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Intl Small and Federated Institutional 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 Federated Institutional High are associated (or correlated) with Oppenheimer Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Intl Small has no effect on the direction of Federated Institutional i.e., Federated Institutional and Oppenheimer Intl go up and down completely randomly.
Pair Corralation between Federated Institutional and Oppenheimer Intl
Assuming the 90 days horizon Federated Institutional High is expected to generate 0.19 times more return on investment than Oppenheimer Intl. However, Federated Institutional High is 5.32 times less risky than Oppenheimer Intl. It trades about 0.14 of its potential returns per unit of risk. Oppenheimer Intl Small is currently generating about -0.1 per unit of risk. If you would invest 883.00 in Federated Institutional High on September 3, 2024 and sell it today you would earn a total of 12.00 from holding Federated Institutional High or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Institutional High vs. Oppenheimer Intl Small
Performance |
| Timeline |
| Federated Institutional |
| Oppenheimer Intl Small |
Federated Institutional and Oppenheimer Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Institutional and Oppenheimer Intl
The main advantage of trading using opposite Federated Institutional and Oppenheimer Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Institutional position performs unexpectedly, Oppenheimer Intl 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 Intl will offset losses from the drop in Oppenheimer Intl's long position.The idea behind Federated Institutional High and Oppenheimer Intl Small 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.
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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