Correlation Between GM and Oppenheimer Discovery
Can any of the company-specific risk be diversified away by investing in both GM and Oppenheimer Discovery 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 GM and Oppenheimer Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Oppenheimer Discovery C, you can compare the effects of market volatilities on GM and Oppenheimer Discovery 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 GM with a short position of Oppenheimer Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Oppenheimer Discovery.
Diversification Opportunities for GM and Oppenheimer Discovery
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Oppenheimer is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Oppenheimer Discovery C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Discovery and GM 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 General Motors are associated (or correlated) with Oppenheimer Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Discovery has no effect on the direction of GM i.e., GM and Oppenheimer Discovery go up and down completely randomly.
Pair Corralation between GM and Oppenheimer Discovery
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Oppenheimer Discovery. In addition to that, GM is 1.73 times more volatile than Oppenheimer Discovery C. It trades about -0.32 of its total potential returns per unit of risk. Oppenheimer Discovery C is currently generating about -0.22 per unit of volatility. If you would invest 4,397 in Oppenheimer Discovery C on November 28, 2024 and sell it today you would lose (266.00) from holding Oppenheimer Discovery C or give up 6.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Oppenheimer Discovery C
Performance |
| Timeline |
| General Motors |
| Oppenheimer Discovery |
GM and Oppenheimer Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Oppenheimer Discovery
The main advantage of trading using opposite GM and Oppenheimer Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Oppenheimer Discovery 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 Discovery will offset losses from the drop in Oppenheimer Discovery's long position.The idea behind General Motors and Oppenheimer Discovery C 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.| Oppenheimer Discovery vs. Ep Emerging Markets | Oppenheimer Discovery vs. Dws Emerging Markets | Oppenheimer Discovery vs. Barings Emerging Markets | Oppenheimer Discovery vs. Rbc Emerging Markets |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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