Correlation Between Oppenheimer Strategic and Oppenheimer Cap
Can any of the company-specific risk be diversified away by investing in both Oppenheimer Strategic and Oppenheimer Cap 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 Cap 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 Cap Apprec, you can compare the effects of market volatilities on Oppenheimer Strategic and Oppenheimer Cap 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 Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Strategic and Oppenheimer Cap.
Diversification Opportunities for Oppenheimer Strategic and Oppenheimer Cap
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Oppenheimer and Oppenheimer is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Strategic Income and Oppenheimer Cap Apprec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Cap Apprec 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 Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Cap Apprec has no effect on the direction of Oppenheimer Strategic i.e., Oppenheimer Strategic and Oppenheimer Cap go up and down completely randomly.
Pair Corralation between Oppenheimer Strategic and Oppenheimer Cap
Assuming the 90 days horizon Oppenheimer Strategic is expected to generate 5.33 times less return on investment than Oppenheimer Cap. But when comparing it to its historical volatility, Oppenheimer Strategic Income is 3.56 times less risky than Oppenheimer Cap. It trades about 0.09 of its potential returns per unit of risk. Oppenheimer Cap Apprec is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,351 in Oppenheimer Cap Apprec on August 31, 2024 and sell it today you would earn a total of 252.00 from holding Oppenheimer Cap Apprec or generate 3.43% 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 Cap Apprec
Performance |
| Timeline |
| Oppenheimer Strategic |
| Oppenheimer Cap Apprec |
Oppenheimer Strategic and Oppenheimer Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oppenheimer Strategic and Oppenheimer Cap
The main advantage of trading using opposite Oppenheimer Strategic and Oppenheimer Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer Strategic position performs unexpectedly, Oppenheimer Cap 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 Cap will offset losses from the drop in Oppenheimer Cap's long position.The idea behind Oppenheimer Strategic Income and Oppenheimer Cap Apprec 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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