Correlation Between Moderate Balanced and Oppenheimer Discovery

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

By analyzing existing cross correlation between Moderate Balanced Allocation and Oppenheimer Discovery Mid, you can compare the effects of market volatilities on Moderate Balanced 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 Moderate Balanced with a short position of Oppenheimer Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderate Balanced and Oppenheimer Discovery.

Diversification Opportunities for Moderate Balanced and Oppenheimer Discovery

0.95

Correlation Coefficient

Moderate Balanced  Oppenheimer Discovery

Almost no diversification

The 3 months correlation between MODERATE and Oppenheimer is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Balanced Allocation 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 Moderate Balanced 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 Moderate Balanced Allocation 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 Moderate Balanced i.e., Moderate Balanced and Oppenheimer Discovery go up and down completely randomly.

Pair Corralation between Moderate Balanced and Oppenheimer Discovery

Assuming the 90 days horizon Moderate Balanced is expected to generate 3.59 times less return on investment than Oppenheimer Discovery. But when comparing it to its historical volatility, Moderate Balanced Allocation is 2.1 times less risky than Oppenheimer Discovery. It trades about 0.04 of its potential returns per unit of risk. Oppenheimer Discovery Mid is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,858  in Oppenheimer Discovery Mid on October 26, 2024 and sell it today you would earn a total of  149.00  from holding Oppenheimer Discovery Mid or generate 5.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Moderate Balanced Allocation  vs.  Oppenheimer Discovery Mid

Moderate Balanced

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Moderate Balanced Allocation are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Moderate Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oppenheimer Discovery Mid

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Discovery Mid are ranked lower than 5 (%) 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 Moderate Balanced and Oppenheimer Discovery

The main advantage of trading using opposite Moderate Balanced and Oppenheimer Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderate Balanced 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 Moderate Balanced Allocation 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.