Correlation Between Oppenheimer International and Capital World
Can any of the company-specific risk be diversified away by investing in both Oppenheimer International and Capital World 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 Capital World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oppenheimer International Diversified and Capital World Bond, you can compare the effects of market volatilities on Oppenheimer International and Capital World 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer International and Capital World.
Diversification Opportunities for Oppenheimer International and Capital World
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oppenheimer and Capital is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer International Dive and Capital World Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Bond 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 Diversified are associated (or correlated) with Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Bond has no effect on the direction of Oppenheimer International i.e., Oppenheimer International and Capital World go up and down completely randomly.
Pair Corralation between Oppenheimer International and Capital World
Assuming the 90 days horizon Oppenheimer International Diversified is expected to generate 2.07 times more return on investment than Capital World. However, Oppenheimer International is 2.07 times more volatile than Capital World Bond. It trades about 0.06 of its potential returns per unit of risk. Capital World Bond is currently generating about 0.07 per unit of risk. If you would invest 1,440 in Oppenheimer International Diversified on September 4, 2024 and sell it today you would earn a total of 190.00 from holding Oppenheimer International Diversified or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oppenheimer International Dive vs. Capital World Bond
Performance |
| Timeline |
| Oppenheimer International |
| Capital World Bond |
Oppenheimer International and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oppenheimer International and Capital World
The main advantage of trading using opposite Oppenheimer International and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer International position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.The idea behind Oppenheimer International Diversified and Capital World Bond 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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