Correlation Between Pimco California and Oppenheimer Global

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

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

Diversification Opportunities for Pimco California and Oppenheimer Global

0.81

Correlation Coefficient

Pimco California  Oppenheimer Global

Very poor diversification

The 3 months correlation between Pimco and Oppenheimer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pimco California Municipal and Oppenheimer Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Global and Pimco California 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 Pimco California Municipal are associated (or correlated) with Oppenheimer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Global has no effect on the direction of Pimco California i.e., Pimco California and Oppenheimer Global go up and down completely randomly.

Pair Corralation between Pimco California and Oppenheimer Global

Assuming the 90 days horizon Pimco California Municipal is expected to under-perform the Oppenheimer Global. In addition to that, Pimco California is 1.17 times more volatile than Oppenheimer Global Allocation. It trades about -0.07 of its total potential returns per unit of risk. Oppenheimer Global Allocation is currently generating about -0.08 per unit of volatility. If you would invest  1,992  in Oppenheimer Global Allocation on October 8, 2024 and sell it today you would lose (51.00) from holding Oppenheimer Global Allocation or give up 2.56% of portfolio value over 90 days.

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

Pimco California Municipal  vs.  Oppenheimer Global Allocation

Pimco California Mun

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oppenheimer Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pimco California and Oppenheimer Global

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

The idea behind Pimco California Municipal and Oppenheimer Global Allocation 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.