Correlation Between Oppenheimer International and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Oppenheimer International and Invesco Municipal 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 Oppenheimer International and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oppenheimer International Bond and Invesco Municipal Income, you can compare the effects of market volatilities on Oppenheimer International and Invesco Municipal 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 Oppenheimer International with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer International and Invesco Municipal.
Diversification Opportunities for Oppenheimer International and Invesco Municipal
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oppenheimer and Invesco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer International Bond and Invesco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Income and Oppenheimer International 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 Oppenheimer International Bond are associated (or correlated) with Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Income has no effect on the direction of Oppenheimer International i.e., Oppenheimer International and Invesco Municipal go up and down completely randomly.
Pair Corralation between Oppenheimer International and Invesco Municipal
Assuming the 90 days horizon Oppenheimer International is expected to generate 27.1 times less return on investment than Invesco Municipal. In addition to that, Oppenheimer International is 1.39 times more volatile than Invesco Municipal Income. It trades about 0.0 of its total potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.08 per unit of volatility. If you would invest 1,195 in Invesco Municipal Income on August 26, 2024 and sell it today you would earn a total of 7.00 from holding Invesco Municipal Income or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oppenheimer International Bond vs. Invesco Municipal Income
Performance |
| Timeline |
| Oppenheimer International |
| Invesco Municipal Income |
Oppenheimer International and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oppenheimer International and Invesco Municipal
The main advantage of trading using opposite Oppenheimer International and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer International position performs unexpectedly, Invesco Municipal 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 Invesco Municipal will offset losses from the drop in Invesco Municipal's long position.The idea behind Oppenheimer International Bond and Invesco Municipal Income 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.
| Invesco Municipal vs. Oppenheimer Rising Dividends | Invesco Municipal vs. Invesco High Yield | Invesco Municipal vs. Oppenheimer Strategic Income | Invesco Municipal vs. Oppenheimer International Small |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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