Correlation Between Oppenheimer Intl and Oppenheimer Discovery

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

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

Diversification Opportunities for Oppenheimer Intl and Oppenheimer Discovery

0.39

Correlation Coefficient

Oppenheimer Intl  Oppenheimer Discovery

Weak diversification

The 3 months correlation between Oppenheimer and Oppenheimer is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Intl Small and Oppenheimer Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Discovery and Oppenheimer Intl 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 Intl Small are associated (or correlated) with Oppenheimer Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Discovery has no effect on the direction of Oppenheimer Intl i.e., Oppenheimer Intl and Oppenheimer Discovery go up and down completely randomly.

Pair Corralation between Oppenheimer Intl and Oppenheimer Discovery

Assuming the 90 days horizon Oppenheimer Intl Small is expected to under-perform the Oppenheimer Discovery. But the mutual fund apears to be less risky and, when comparing its historical volatility, Oppenheimer Intl Small is 1.3 times less risky than Oppenheimer Discovery. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Oppenheimer Discovery is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,142  in Oppenheimer Discovery on October 11, 2024 and sell it today you would earn a total of  3,139  from holding Oppenheimer Discovery or generate 34.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Oppenheimer Intl Small  vs.  Oppenheimer Discovery

Oppenheimer Intl Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oppenheimer Intl Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Oppenheimer Discovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oppenheimer Discovery has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oppenheimer Discovery 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 Intl and Oppenheimer Discovery

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

The idea behind Oppenheimer Intl Small and Oppenheimer Discovery 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.