Correlation Between Oppenheimer Gold and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Oppenheimer Gold and Legg Mason 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 Gold and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oppenheimer Gold Special and Legg Mason Bw, you can compare the effects of market volatilities on Oppenheimer Gold and Legg Mason 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 Gold with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Gold and Legg Mason.
Diversification Opportunities for Oppenheimer Gold and Legg Mason
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Oppenheimer and Legg is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Gold Special and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw and Oppenheimer Gold 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 Gold Special are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Bw has no effect on the direction of Oppenheimer Gold i.e., Oppenheimer Gold and Legg Mason go up and down completely randomly.
Pair Corralation between Oppenheimer Gold and Legg Mason
Assuming the 90 days horizon Oppenheimer Gold Special is expected to generate 3.7 times more return on investment than Legg Mason. However, Oppenheimer Gold is 3.7 times more volatile than Legg Mason Bw. It trades about 0.04 of its potential returns per unit of risk. Legg Mason Bw is currently generating about -0.24 per unit of risk. If you would invest 2,469 in Oppenheimer Gold Special on September 12, 2024 and sell it today you would earn a total of 86.00 from holding Oppenheimer Gold Special or generate 3.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Oppenheimer Gold Special vs. Legg Mason Bw
Performance |
Timeline |
Oppenheimer Gold Special |
Legg Mason Bw |
Oppenheimer Gold and Legg Mason Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oppenheimer Gold and Legg Mason
The main advantage of trading using opposite Oppenheimer Gold and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer Gold position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.Oppenheimer Gold vs. First Eagle Gold | Oppenheimer Gold vs. HUMANA INC | Oppenheimer Gold vs. Barloworld Ltd ADR | Oppenheimer Gold vs. Morningstar Unconstrained Allocation |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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