Correlation Between Oppenheimer Target and Invesco Convertible

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

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

Diversification Opportunities for Oppenheimer Target and Invesco Convertible

0.96

Correlation Coefficient

Oppenheimer Target  Invesco Convertible

Almost no diversification

The 3 months correlation between Oppenheimer and Invesco is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Target and Invesco Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Vertible Sec and Oppenheimer Target 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 Target are associated (or correlated) with Invesco Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Vertible Sec has no effect on the direction of Oppenheimer Target i.e., Oppenheimer Target and Invesco Convertible go up and down completely randomly.

Pair Corralation between Oppenheimer Target and Invesco Convertible

Assuming the 90 days horizon Oppenheimer Target is expected to under-perform the Invesco Convertible. In addition to that, Oppenheimer Target is 2.47 times more volatile than Invesco Vertible Securities. It trades about -0.11 of its total potential returns per unit of risk. Invesco Vertible Securities is currently generating about -0.05 per unit of volatility. If you would invest  2,413  in Invesco Vertible Securities on December 23, 2024 and sell it today you would lose (57.00) from holding Invesco Vertible Securities or give up 2.36% of portfolio value over 90 days.

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

Oppenheimer Target  vs.  Invesco Vertible Securities

Oppenheimer Target

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oppenheimer Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Invesco Vertible Sec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Vertible Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Invesco Convertible 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 Target and Invesco Convertible

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

The idea behind Oppenheimer Target and Invesco Vertible Securities 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.