Correlation Between GM and Oppenheimer Rchster

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

By analyzing existing cross correlation between General Motors and Oppenheimer Rchster Amt, you can compare the effects of market volatilities on GM and Oppenheimer Rchster 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 GM with a short position of Oppenheimer Rchster. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Oppenheimer Rchster.

Diversification Opportunities for GM and Oppenheimer Rchster

-0.53

Correlation Coefficient

GM  Oppenheimer Rchster

Excellent diversification

The 3 months correlation between GM and Oppenheimer is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Oppenheimer Rchster Amt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Rchster Amt and GM 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 General Motors are associated (or correlated) with Oppenheimer Rchster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Rchster Amt has no effect on the direction of GM i.e., GM and Oppenheimer Rchster go up and down completely randomly.

Pair Corralation between GM and Oppenheimer Rchster

Allowing for the 90-day total investment horizon General Motors is expected to generate 6.36 times more return on investment than Oppenheimer Rchster. However, GM is 6.36 times more volatile than Oppenheimer Rchster Amt. It trades about 0.05 of its potential returns per unit of risk. Oppenheimer Rchster Amt is currently generating about 0.06 per unit of risk. If you would invest  3,778  in General Motors on September 2, 2024 and sell it today you would earn a total of  1,781  from holding General Motors or generate 47.14% return on investment over 90 days.

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

General Motors  vs.  Oppenheimer Rchster Amt

General Motors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Oppenheimer Rchster Amt

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Rchster Amt are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Oppenheimer Rchster is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GM and Oppenheimer Rchster

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

The idea behind General Motors and Oppenheimer Rchster Amt 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.