Correlation Between Franklin Pennsylvania and Oppenheimer Rochester
Can any of the company-specific risk be diversified away by investing in both Franklin Pennsylvania 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 Pennsylvania 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 Pennsylvania Tax Free and Oppenheimer Rochester Pa, you can compare the effects of market volatilities on Franklin Pennsylvania 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 Pennsylvania with a short position of Oppenheimer Rochester. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Pennsylvania and Oppenheimer Rochester.
Diversification Opportunities for Franklin Pennsylvania and Oppenheimer Rochester
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Oppenheimer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Pennsylvania Tax Free and Oppenheimer Rochester Pa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Rochester and Franklin Pennsylvania 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 Pennsylvania 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 Pennsylvania i.e., Franklin Pennsylvania and Oppenheimer Rochester go up and down completely randomly.
Pair Corralation between Franklin Pennsylvania and Oppenheimer Rochester
Assuming the 90 days horizon Franklin Pennsylvania is expected to generate 1.36 times less return on investment than Oppenheimer Rochester. In addition to that, Franklin Pennsylvania is 1.01 times more volatile than Oppenheimer Rochester Pa. It trades about 0.08 of its total potential returns per unit of risk. Oppenheimer Rochester Pa is currently generating about 0.11 per unit of volatility. If you would invest 1,028 in Oppenheimer Rochester Pa on September 2, 2024 and sell it today you would earn a total of 19.00 from holding Oppenheimer Rochester Pa or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Pennsylvania Tax Free vs. Oppenheimer Rochester Pa
Performance |
| Timeline |
| Franklin Pennsylvania |
| Oppenheimer Rochester |
Franklin Pennsylvania and Oppenheimer Rochester Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Pennsylvania and Oppenheimer Rochester
The main advantage of trading using opposite Franklin Pennsylvania and Oppenheimer Rochester positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Pennsylvania 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 Pennsylvania Tax Free and Oppenheimer Rochester Pa 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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