Correlation Between Sp Midcap and Oppenheimer Main

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

By analyzing existing cross correlation between Sp Midcap Index and Oppenheimer Main Street, you can compare the effects of market volatilities on Sp Midcap and Oppenheimer Main 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 Sp Midcap with a short position of Oppenheimer Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Midcap and Oppenheimer Main.

Diversification Opportunities for Sp Midcap and Oppenheimer Main

0.99

Correlation Coefficient

Sp Midcap  Oppenheimer Main

No risk reduction

The 3 months correlation between SPMIX and Oppenheimer is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap Index and Oppenheimer Main Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Main Street and Sp Midcap 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 Sp Midcap Index are associated (or correlated) with Oppenheimer Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Main Street has no effect on the direction of Sp Midcap i.e., Sp Midcap and Oppenheimer Main go up and down completely randomly.

Pair Corralation between Sp Midcap and Oppenheimer Main

Assuming the 90 days horizon Sp Midcap Index is expected to under-perform the Oppenheimer Main. But the mutual fund apears to be less risky and, when comparing its historical volatility, Sp Midcap Index is 1.08 times less risky than Oppenheimer Main. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Oppenheimer Main Street is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,122  in Oppenheimer Main Street on December 30, 2024 and sell it today you would lose (118.00) from holding Oppenheimer Main Street or give up 5.56% of portfolio value over 90 days.

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

Sp Midcap Index  vs.  Oppenheimer Main Street

Sp Midcap Index

Risk-Adjusted Performance

Very Weak

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

Oppenheimer Main Street

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sp Midcap and Oppenheimer Main

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

The idea behind Sp Midcap Index and Oppenheimer Main Street 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.