Correlation Between Oppenheimer Senior and First Trust
Can any of the company-specific risk be diversified away by investing in both Oppenheimer Senior and First Trust 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 Senior and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oppenheimer Senior Floating and First Trust Short, you can compare the effects of market volatilities on Oppenheimer Senior and First Trust 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 Senior with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Senior and First Trust.
Diversification Opportunities for Oppenheimer Senior and First Trust
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Oppenheimer and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Senior Floating and First Trust Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Short and Oppenheimer Senior 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 Senior Floating are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Short has no effect on the direction of Oppenheimer Senior i.e., Oppenheimer Senior and First Trust go up and down completely randomly.
Pair Corralation between Oppenheimer Senior and First Trust
Assuming the 90 days horizon Oppenheimer Senior is expected to generate 1.15 times less return on investment than First Trust. In addition to that, Oppenheimer Senior is 1.36 times more volatile than First Trust Short. It trades about 0.12 of its total potential returns per unit of risk. First Trust Short is currently generating about 0.19 per unit of volatility. If you would invest 1,793 in First Trust Short on August 28, 2024 and sell it today you would earn a total of 19.00 from holding First Trust Short or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oppenheimer Senior Floating vs. First Trust Short
Performance |
| Timeline |
| Oppenheimer Senior |
| First Trust Short |
Oppenheimer Senior and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oppenheimer Senior and First Trust
The main advantage of trading using opposite Oppenheimer Senior and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer Senior position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Oppenheimer Senior vs. Oppenheimer Main Street | Oppenheimer Senior vs. Oppenheimer Intl Small | Oppenheimer Senior vs. Oppenheimer Main Street | Oppenheimer Senior vs. Oppenheimer Global Strtgc |
| First Trust vs. First Trust Managed | First Trust vs. Franklin Templeton Multi Asset | First Trust vs. Vivaldi Merger Arbitrage | First Trust vs. First Trust Merger |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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