Correlation Between American Funds and Oppenheimer Global
Can any of the company-specific risk be diversified away by investing in both American Funds and Oppenheimer Global 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 American Funds and Oppenheimer Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Oppenheimer Global, you can compare the effects of market volatilities on American Funds and Oppenheimer Global 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 American Funds with a short position of Oppenheimer Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Oppenheimer Global.
Diversification Opportunities for American Funds and Oppenheimer Global
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Oppenheimer is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Oppenheimer Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Global and American Funds 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 American Funds New are associated (or correlated) with Oppenheimer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Global has no effect on the direction of American Funds i.e., American Funds and Oppenheimer Global go up and down completely randomly.
Pair Corralation between American Funds and Oppenheimer Global
Assuming the 90 days horizon American Funds New is expected to generate 0.74 times more return on investment than Oppenheimer Global. However, American Funds New is 1.36 times less risky than Oppenheimer Global. It trades about 0.18 of its potential returns per unit of risk. Oppenheimer Global is currently generating about 0.07 per unit of risk. If you would invest 6,421 in American Funds New on September 1, 2024 and sell it today you would earn a total of 149.00 from holding American Funds New or generate 2.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds New vs. Oppenheimer Global
Performance |
| Timeline |
| American Funds New |
| Oppenheimer Global |
American Funds and Oppenheimer Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Oppenheimer Global
The main advantage of trading using opposite American Funds and Oppenheimer Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Oppenheimer Global 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 Global will offset losses from the drop in Oppenheimer Global's long position.| American Funds vs. Ishares Municipal Bond | American Funds vs. Nuveen Minnesota Municipal | American Funds vs. Federated Ohio Municipal | American Funds vs. Nuveen Arizona Municipal |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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