Correlation Between Oppenheimer Main and Short Precious

Can any of the company-specific risk be diversified away by investing in both Oppenheimer Main and Short Precious 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 Short Precious 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 Short Precious Metals, you can compare the effects of market volatilities on Oppenheimer Main and Short Precious 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 Short Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Main and Short Precious.

Diversification Opportunities for Oppenheimer Main and Short Precious

-0.24

Correlation Coefficient

Oppenheimer Main  Short Precious

Very good diversification

The 3 months correlation between Oppenheimer and Short is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Main Street and Short Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Precious Metals 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 Short Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Precious Metals has no effect on the direction of Oppenheimer Main i.e., Oppenheimer Main and Short Precious go up and down completely randomly.

Pair Corralation between Oppenheimer Main and Short Precious

Assuming the 90 days horizon Oppenheimer Main Street is expected to under-perform the Short Precious. But the mutual fund apears to be less risky and, when comparing its historical volatility, Oppenheimer Main Street is 1.35 times less risky than Short Precious. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Short Precious Metals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  835.00  in Short Precious Metals on October 21, 2024 and sell it today you would earn a total of  140.00  from holding Short Precious Metals or generate 16.77% return on investment over 90 days.

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

Oppenheimer Main Street  vs.  Short Precious Metals

Oppenheimer Main Street

Risk-Adjusted Performance

0 of 100

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.

Short Precious Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Precious Metals are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Precious showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oppenheimer Main and Short Precious

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

The idea behind Oppenheimer Main Street and Short Precious Metals 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.