Correlation Between Oppenheimer Capital and Wells Fargo

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

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

Diversification Opportunities for Oppenheimer Capital and Wells Fargo

0.68

Correlation Coefficient

Oppenheimer Capital  Wells Fargo

Poor diversification

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

Pair Corralation between Oppenheimer Capital and Wells Fargo

Assuming the 90 days horizon Oppenheimer Capital Appreciation is expected to generate 7.58 times more return on investment than Wells Fargo. However, Oppenheimer Capital is 7.58 times more volatile than Wells Fargo Funds. It trades about 0.21 of its potential returns per unit of risk. Wells Fargo Funds is currently generating about 0.13 per unit of risk. If you would invest  9,223  in Oppenheimer Capital Appreciation on September 12, 2024 and sell it today you would earn a total of  1,244  from holding Oppenheimer Capital Appreciation or generate 13.49% return on investment over 90 days.

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

Oppenheimer Capital Appreciati  vs.  Wells Fargo Funds

Oppenheimer Capital

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Capital Appreciation are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oppenheimer Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Wells Fargo Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Wells Fargo 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 Capital and Wells Fargo

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

The idea behind Oppenheimer Capital Appreciation and Wells Fargo Funds 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.