Correlation Between New York and Oppenheimer Rochester

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

By analyzing existing cross correlation between New York Municipal and Oppenheimer Rochester Ltdterm, you can compare the effects of market volatilities on New York and Oppenheimer Rochester 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 New York with a short position of Oppenheimer Rochester. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Oppenheimer Rochester.

Diversification Opportunities for New York and Oppenheimer Rochester

0.92

Correlation Coefficient

New York  Oppenheimer Rochester

Almost no diversification

The 3 months correlation between New and Oppenheimer is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding New York Municipal and Oppenheimer Rochester Ltdterm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Rochester and New York 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 New York Municipal are associated (or correlated) with Oppenheimer Rochester. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Rochester has no effect on the direction of New York i.e., New York and Oppenheimer Rochester go up and down completely randomly.

Pair Corralation between New York and Oppenheimer Rochester

Assuming the 90 days horizon New York Municipal is expected to generate 0.7 times more return on investment than Oppenheimer Rochester. However, New York Municipal is 1.43 times less risky than Oppenheimer Rochester. It trades about 0.07 of its potential returns per unit of risk. Oppenheimer Rochester Ltdterm is currently generating about 0.03 per unit of risk. If you would invest  1,278  in New York Municipal on October 9, 2024 and sell it today you would earn a total of  66.00  from holding New York Municipal or generate 5.16% return on investment over 90 days.

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

New York Municipal  vs.  Oppenheimer Rochester Ltdterm

New York Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New York Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, New York is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oppenheimer Rochester

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oppenheimer Rochester Ltdterm has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Oppenheimer Rochester is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with New York and Oppenheimer Rochester

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

The idea behind New York Municipal and Oppenheimer Rochester Ltdterm 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.