Correlation Between Oppenheimer International and American Beacon
Can any of the company-specific risk be diversified away by investing in both Oppenheimer International and American Beacon 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 American Beacon 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 American Beacon Shapiro, you can compare the effects of market volatilities on Oppenheimer International and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer International and American Beacon.
Diversification Opportunities for Oppenheimer International and American Beacon
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oppenheimer and American is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer International Dive and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Shapiro has no effect on the direction of Oppenheimer International i.e., Oppenheimer International and American Beacon go up and down completely randomly.
Pair Corralation between Oppenheimer International and American Beacon
Assuming the 90 days horizon Oppenheimer International Diversified is expected to generate 0.79 times more return on investment than American Beacon. However, Oppenheimer International Diversified is 1.26 times less risky than American Beacon. It trades about 0.13 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about -0.1 per unit of risk. If you would invest 1,624 in Oppenheimer International Diversified on September 13, 2024 and sell it today you would earn a total of 23.00 from holding Oppenheimer International Diversified or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oppenheimer International Dive vs. American Beacon Shapiro
Performance |
| Timeline |
| Oppenheimer International |
| American Beacon Shapiro |
Oppenheimer International and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oppenheimer International and American Beacon
The main advantage of trading using opposite Oppenheimer International and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer International position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.The idea behind Oppenheimer International Diversified and American Beacon Shapiro 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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