Correlation Between Financials Ultrasector and Oppenheimer Senior
Can any of the company-specific risk be diversified away by investing in both Financials Ultrasector and Oppenheimer Senior 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 Financials Ultrasector and Oppenheimer Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financials Ultrasector Profund and Oppenheimer Senior Floating, you can compare the effects of market volatilities on Financials Ultrasector and Oppenheimer Senior 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 Financials Ultrasector with a short position of Oppenheimer Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Oppenheimer Senior.
Diversification Opportunities for Financials Ultrasector and Oppenheimer Senior
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Financials and Oppenheimer is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Oppenheimer Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Senior and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Oppenheimer Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Senior has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Oppenheimer Senior go up and down completely randomly.
Pair Corralation between Financials Ultrasector and Oppenheimer Senior
Assuming the 90 days horizon Financials Ultrasector Profund is expected to generate 6.58 times more return on investment than Oppenheimer Senior. However, Financials Ultrasector is 6.58 times more volatile than Oppenheimer Senior Floating. It trades about 0.07 of its potential returns per unit of risk. Oppenheimer Senior Floating is currently generating about 0.17 per unit of risk. If you would invest 2,882 in Financials Ultrasector Profund on November 2, 2024 and sell it today you would earn a total of 1,708 from holding Financials Ultrasector Profund or generate 59.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financials Ultrasector Profund vs. Oppenheimer Senior Floating
Performance |
| Timeline |
| Financials Ultrasector |
| Oppenheimer Senior |
Financials Ultrasector and Oppenheimer Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financials Ultrasector and Oppenheimer Senior
The main advantage of trading using opposite Financials Ultrasector and Oppenheimer Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financials Ultrasector position performs unexpectedly, Oppenheimer Senior 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 Senior will offset losses from the drop in Oppenheimer Senior's long position.The idea behind Financials Ultrasector Profund and Oppenheimer Senior Floating 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |