Correlation Between Franklin California and Oppenheimer Rochester
Can any of the company-specific risk be diversified away by investing in both Franklin California and Oppenheimer Rochester 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 Franklin California and Oppenheimer Rochester into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin California Tax Free and Oppenheimer Rochester Ca, you can compare the effects of market volatilities on Franklin California and Oppenheimer Rochester 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 Franklin California with a short position of Oppenheimer Rochester. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin California and Oppenheimer Rochester.
Diversification Opportunities for Franklin California and Oppenheimer Rochester
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Oppenheimer is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Franklin California Tax Free and Oppenheimer Rochester Ca in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Rochester and Franklin California 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 Franklin California Tax Free are associated (or correlated) with Oppenheimer Rochester. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Rochester has no effect on the direction of Franklin California i.e., Franklin California and Oppenheimer Rochester go up and down completely randomly.
Pair Corralation between Franklin California and Oppenheimer Rochester
Assuming the 90 days horizon Franklin California is expected to generate 1.17 times less return on investment than Oppenheimer Rochester. But when comparing it to its historical volatility, Franklin California Tax Free is 1.04 times less risky than Oppenheimer Rochester. It trades about 0.1 of its potential returns per unit of risk. Oppenheimer Rochester Ca is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 791.00 in Oppenheimer Rochester Ca on September 3, 2024 and sell it today you would earn a total of 29.00 from holding Oppenheimer Rochester Ca or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin California Tax Free vs. Oppenheimer Rochester Ca
Performance |
| Timeline |
| Franklin California Tax |
| Oppenheimer Rochester |
Franklin California and Oppenheimer Rochester Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin California and Oppenheimer Rochester
The main advantage of trading using opposite Franklin California and Oppenheimer Rochester positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin California position performs unexpectedly, Oppenheimer Rochester 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 Rochester will offset losses from the drop in Oppenheimer Rochester's long position.The idea behind Franklin California Tax Free and Oppenheimer Rochester Ca 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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