Correlation Between Oppenheimer International and Invesco Small

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

Diversification Opportunities for Oppenheimer International and Invesco Small

-0.68

Correlation Coefficient

Oppenheimer International  Invesco Small

Excellent diversification

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

Pair Corralation between Oppenheimer International and Invesco Small

Assuming the 90 days horizon Oppenheimer International Small is expected to under-perform the Invesco Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Oppenheimer International Small is 1.61 times less risky than Invesco Small. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Invesco Small Cap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,474  in Invesco Small Cap on August 31, 2024 and sell it today you would earn a total of  226.00  from holding Invesco Small Cap or generate 15.33% return on investment over 90 days.

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

Oppenheimer International Smal  vs.  Invesco Small Cap

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 fairly strong fundamental indicators, Oppenheimer International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Small Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Small Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oppenheimer International and Invesco Small

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

The idea behind Oppenheimer International Small and Invesco Small Cap 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.