Correlation Between Invesco Balanced-risk and Oppenheimer International

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

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

Diversification Opportunities for Invesco Balanced-risk and Oppenheimer International

0.44

Correlation Coefficient

Invesco Balanced-risk  Oppenheimer International

Very weak diversification

The 3 months correlation between Invesco and Oppenheimer is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Balanced Risk Modity and Oppenheimer International Smal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer International and Invesco Balanced-risk 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 Invesco Balanced Risk Modity 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 Invesco Balanced-risk i.e., Invesco Balanced-risk and Oppenheimer International go up and down completely randomly.

Pair Corralation between Invesco Balanced-risk and Oppenheimer International

Assuming the 90 days horizon Invesco Balanced Risk Modity is expected to under-perform the Oppenheimer International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Balanced Risk Modity is 1.95 times less risky than Oppenheimer International. The mutual fund trades about -0.28 of its potential returns per unit of risk. The Oppenheimer International Small is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3,873  in Oppenheimer International Small on December 10, 2024 and sell it today you would lose (57.00) from holding Oppenheimer International Small or give up 1.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Invesco Balanced Risk Modity  vs.  Oppenheimer International Smal

Invesco Balanced Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Balanced Risk Modity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Invesco Balanced-risk 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

Very Weak

Over the last 90 days Oppenheimer International Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Invesco Balanced-risk and Oppenheimer International

The main advantage of trading using opposite Invesco Balanced-risk and Oppenheimer International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Balanced-risk 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 Invesco Balanced Risk Modity 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.