Correlation Between Oppenheimer Main and Oppenheimer Cap

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

By analyzing existing cross correlation between Oppenheimer Main Street and Oppenheimer Cap Apprec, you can compare the effects of market volatilities on Oppenheimer Main and Oppenheimer Cap 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 Main with a short position of Oppenheimer Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Main and Oppenheimer Cap.

Diversification Opportunities for Oppenheimer Main and Oppenheimer Cap

0.81

Correlation Coefficient

Oppenheimer Main  Oppenheimer Cap

Very poor diversification

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

Pair Corralation between Oppenheimer Main and Oppenheimer Cap

Assuming the 90 days horizon Oppenheimer Main is expected to generate 1.49 times less return on investment than Oppenheimer Cap. But when comparing it to its historical volatility, Oppenheimer Main Street is 1.45 times less risky than Oppenheimer Cap. It trades about 0.09 of its potential returns per unit of risk. Oppenheimer Cap Apprec is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,649  in Oppenheimer Cap Apprec on November 20, 2024 and sell it today you would earn a total of  2,043  from holding Oppenheimer Cap Apprec or generate 36.17% return on investment over 90 days.

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

Oppenheimer Main Street  vs.  Oppenheimer Cap Apprec

Oppenheimer Main Street

Risk-Adjusted Performance

Very Weak

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

Oppenheimer Cap Apprec

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Cap Apprec are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Oppenheimer Cap 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 Main and Oppenheimer Cap

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

The idea behind Oppenheimer Main Street and Oppenheimer Cap Apprec 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.