Correlation Between Invesco SP and Oppenheimer Russell

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

By analyzing existing cross correlation between Invesco SP SmallCap and Oppenheimer Russell 2000, you can compare the effects of market volatilities on Invesco SP and Oppenheimer Russell 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 Invesco SP with a short position of Oppenheimer Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and Oppenheimer Russell.

Diversification Opportunities for Invesco SP and Oppenheimer Russell

0.98

Correlation Coefficient

Invesco SP  Oppenheimer Russell

Almost no diversification

The 3 months correlation between Invesco and Oppenheimer is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP SmallCap and Oppenheimer Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Russell 2000 and Invesco SP 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 Invesco SP SmallCap are associated (or correlated) with Oppenheimer Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Russell 2000 has no effect on the direction of Invesco SP i.e., Invesco SP and Oppenheimer Russell go up and down completely randomly.

Pair Corralation between Invesco SP and Oppenheimer Russell

Given the investment horizon of 90 days Invesco SP SmallCap is expected to under-perform the Oppenheimer Russell. But the etf apears to be less risky and, when comparing its historical volatility, Invesco SP SmallCap is 1.02 times less risky than Oppenheimer Russell. The etf trades about -0.12 of its potential returns per unit of risk. The Oppenheimer Russell 2000 is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  4,019  in Oppenheimer Russell 2000 on December 24, 2024 and sell it today you would lose (259.00) from holding Oppenheimer Russell 2000 or give up 6.44% of portfolio value over 90 days.

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

Invesco SP SmallCap  vs.  Oppenheimer Russell 2000

Invesco SP SmallCap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco SP SmallCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Oppenheimer Russell 2000

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oppenheimer Russell 2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Invesco SP and Oppenheimer Russell

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

The idea behind Invesco SP SmallCap and Oppenheimer Russell 2000 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.