Correlation Between Oppenheimer International and Lgm Risk

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

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

Diversification Opportunities for Oppenheimer International and Lgm Risk

-0.68

Correlation Coefficient

Oppenheimer International  Lgm Risk

Excellent diversification

The 3 months correlation between Oppenheimer and Lgm is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer International Dive and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk Managed and Oppenheimer International 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 International Diversified are associated (or correlated) with Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of Oppenheimer International i.e., Oppenheimer International and Lgm Risk go up and down completely randomly.

Pair Corralation between Oppenheimer International and Lgm Risk

Assuming the 90 days horizon Oppenheimer International Diversified is expected to under-perform the Lgm Risk. In addition to that, Oppenheimer International is 2.99 times more volatile than Lgm Risk Managed. It trades about -0.07 of its total potential returns per unit of risk. Lgm Risk Managed is currently generating about 0.17 per unit of volatility. If you would invest  1,119  in Lgm Risk Managed on September 17, 2024 and sell it today you would earn a total of  32.00  from holding Lgm Risk Managed or generate 2.86% return on investment over 90 days.

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

Oppenheimer International Dive  vs.  Lgm Risk Managed

Oppenheimer International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oppenheimer International Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oppenheimer International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lgm Risk Managed

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lgm Risk Managed are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lgm Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oppenheimer International and Lgm Risk

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

The idea behind Oppenheimer International Diversified and Lgm Risk Managed 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.