Correlation Between Oppenheimer International and Oppenheimer Discovery

Can any of the company-specific risk be diversified away by investing in both Oppenheimer International 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 International 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 International Small and Oppenheimer Discovery Mid, you can compare the effects of market volatilities on Oppenheimer International 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 International with a short position of Oppenheimer Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer International and Oppenheimer Discovery.

Diversification Opportunities for Oppenheimer International and Oppenheimer Discovery

0.47

Correlation Coefficient

Oppenheimer International  Oppenheimer Discovery

Very weak diversification

The 3 months correlation between Oppenheimer and Oppenheimer is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer International Smal and Oppenheimer Discovery Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Discovery Mid 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 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 Mid has no effect on the direction of Oppenheimer International i.e., Oppenheimer International and Oppenheimer Discovery go up and down completely randomly.

Pair Corralation between Oppenheimer International and Oppenheimer Discovery

Assuming the 90 days horizon Oppenheimer International 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 International Small is 1.41 times less risky than Oppenheimer Discovery. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Oppenheimer Discovery Mid is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,840  in Oppenheimer Discovery Mid on October 22, 2024 and sell it today you would earn a total of  95.00  from holding Oppenheimer Discovery Mid or generate 3.35% return on investment over 90 days.

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

Oppenheimer International Smal  vs.  Oppenheimer Discovery Mid

Oppenheimer International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oppenheimer International 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 fundamental 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 Mid

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Discovery Mid 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 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 International and Oppenheimer Discovery

The main advantage of trading using opposite Oppenheimer International and Oppenheimer Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer International 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 International Small and Oppenheimer Discovery Mid 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.