Correlation Between Absolute Convertible and Oppenheimer International

Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Oppenheimer International 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 Absolute Convertible and Oppenheimer International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Absolute Convertible Arbitrage and Oppenheimer International Small, you can compare the effects of market volatilities on Absolute Convertible and Oppenheimer International 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 Absolute Convertible with a short position of Oppenheimer International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Oppenheimer International.

Diversification Opportunities for Absolute Convertible and Oppenheimer International

0.81

Correlation Coefficient

Absolute Convertible  Oppenheimer International

Very poor diversification

The 3 months correlation between Absolute and Oppenheimer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Oppenheimer International Smal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer International and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Oppenheimer International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer International has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Oppenheimer International go up and down completely randomly.

Pair Corralation between Absolute Convertible and Oppenheimer International

Assuming the 90 days horizon Absolute Convertible is expected to generate 2.07 times less return on investment than Oppenheimer International. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 17.26 times less risky than Oppenheimer International. It trades about 0.7 of its potential returns per unit of risk. Oppenheimer International Small is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,113  in Oppenheimer International Small on December 25, 2024 and sell it today you would earn a total of  136.00  from holding Oppenheimer International Small or generate 4.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Absolute Convertible Arbitrage  vs.  Oppenheimer International Smal

Absolute Convertible

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Convertible Arbitrage are ranked lower than 55 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Absolute Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oppenheimer International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer International Small are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Oppenheimer International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Absolute Convertible and Oppenheimer International

The main advantage of trading using opposite Absolute Convertible and Oppenheimer International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Oppenheimer International 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 International will offset losses from the drop in Oppenheimer International's long position.

The idea behind Absolute Convertible Arbitrage and Oppenheimer International Small 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.