Correlation Between Oppenheimer Strategic and Oppenheimer Disciplined
Can any of the company-specific risk be diversified away by investing in both Oppenheimer Strategic and Oppenheimer Disciplined 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 Oppenheimer Disciplined 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 Oppenheimer Disciplined Value, you can compare the effects of market volatilities on Oppenheimer Strategic and Oppenheimer Disciplined 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 Oppenheimer Disciplined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Strategic and Oppenheimer Disciplined.
Diversification Opportunities for Oppenheimer Strategic and Oppenheimer Disciplined
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Oppenheimer and Oppenheimer is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Strategic Income and Oppenheimer Disciplined Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Disciplined 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 Oppenheimer Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Disciplined has no effect on the direction of Oppenheimer Strategic i.e., Oppenheimer Strategic and Oppenheimer Disciplined go up and down completely randomly.
Pair Corralation between Oppenheimer Strategic and Oppenheimer Disciplined
Assuming the 90 days horizon Oppenheimer Strategic is expected to generate 8.08 times less return on investment than Oppenheimer Disciplined. But when comparing it to its historical volatility, Oppenheimer Strategic Income is 3.34 times less risky than Oppenheimer Disciplined. It trades about 0.09 of its potential returns per unit of risk. Oppenheimer Disciplined Value is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,746 in Oppenheimer Disciplined Value on August 31, 2024 and sell it today you would earn a total of 200.00 from holding Oppenheimer Disciplined Value or generate 5.34% 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. Oppenheimer Disciplined Value
Performance |
| Timeline |
| Oppenheimer Strategic |
| Oppenheimer Disciplined |
Oppenheimer Strategic and Oppenheimer Disciplined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oppenheimer Strategic and Oppenheimer Disciplined
The main advantage of trading using opposite Oppenheimer Strategic and Oppenheimer Disciplined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer Strategic position performs unexpectedly, Oppenheimer Disciplined 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 Oppenheimer Disciplined will offset losses from the drop in Oppenheimer Disciplined's long position.The idea behind Oppenheimer Strategic Income and Oppenheimer Disciplined Value 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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