Correlation Between Extended Market and Oppenheimer Developing
Can any of the company-specific risk be diversified away by investing in both Extended Market and Oppenheimer Developing 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 Extended Market and Oppenheimer Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Oppenheimer Developing Markets, you can compare the effects of market volatilities on Extended Market and Oppenheimer Developing 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 Extended Market with a short position of Oppenheimer Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Oppenheimer Developing.
Diversification Opportunities for Extended Market and Oppenheimer Developing
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Extended and Oppenheimer is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Oppenheimer Developing Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Developing and Extended Market 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 Extended Market Index are associated (or correlated) with Oppenheimer Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Developing has no effect on the direction of Extended Market i.e., Extended Market and Oppenheimer Developing go up and down completely randomly.
Pair Corralation between Extended Market and Oppenheimer Developing
Assuming the 90 days horizon Extended Market Index is expected to generate 0.99 times more return on investment than Oppenheimer Developing. However, Extended Market Index is 1.01 times less risky than Oppenheimer Developing. It trades about 0.14 of its potential returns per unit of risk. Oppenheimer Developing Markets is currently generating about 0.0 per unit of risk. If you would invest 2,261 in Extended Market Index on September 15, 2024 and sell it today you would earn a total of 199.00 from holding Extended Market Index or generate 8.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Extended Market Index vs. Oppenheimer Developing Markets
Performance |
Timeline |
Extended Market Index |
Oppenheimer Developing |
Extended Market and Oppenheimer Developing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Extended Market and Oppenheimer Developing
The main advantage of trading using opposite Extended Market and Oppenheimer Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Oppenheimer Developing 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 Developing will offset losses from the drop in Oppenheimer Developing's long position.Extended Market vs. Income Fund Income | Extended Market vs. Usaa Nasdaq 100 | Extended Market vs. Victory Diversified Stock | Extended Market vs. Intermediate Term Bond Fund |
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Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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