Correlation Between Oppenheimer Strategic and Invesco American
Can any of the company-specific risk be diversified away by investing in both Oppenheimer Strategic and Invesco American 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 Strategic and Invesco American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oppenheimer Strategic Income and Invesco American Franchise, you can compare the effects of market volatilities on Oppenheimer Strategic and Invesco American 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 Strategic with a short position of Invesco American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Strategic and Invesco American.
Diversification Opportunities for Oppenheimer Strategic and Invesco American
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Oppenheimer and INVESCO is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Strategic Income and Invesco American Franchise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco American Fra and Oppenheimer Strategic 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 Strategic Income are associated (or correlated) with Invesco American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco American Fra has no effect on the direction of Oppenheimer Strategic i.e., Oppenheimer Strategic and Invesco American go up and down completely randomly.
Pair Corralation between Oppenheimer Strategic and Invesco American
Assuming the 90 days horizon Oppenheimer Strategic is expected to generate 13.45 times less return on investment than Invesco American. But when comparing it to its historical volatility, Oppenheimer Strategic Income is 3.83 times less risky than Invesco American. It trades about 0.05 of its potential returns per unit of risk. Invesco American Franchise is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,174 in Invesco American Franchise on August 29, 2024 and sell it today you would earn a total of 141.00 from holding Invesco American Franchise or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oppenheimer Strategic Income vs. Invesco American Franchise
Performance |
| Timeline |
| Oppenheimer Strategic |
| Invesco American Fra |
Oppenheimer Strategic and Invesco American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oppenheimer Strategic and Invesco American
The main advantage of trading using opposite Oppenheimer Strategic and Invesco American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer Strategic position performs unexpectedly, Invesco American 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 American will offset losses from the drop in Invesco American's long position.The idea behind Oppenheimer Strategic Income and Invesco American Franchise 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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