Correlation Between Western Asset and Oppenheimer Strategic

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

By analyzing existing cross correlation between Western Asset Diversified and Oppenheimer Strategic Income, you can compare the effects of market volatilities on Western Asset and Oppenheimer Strategic 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 Western Asset with a short position of Oppenheimer Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Oppenheimer Strategic.

Diversification Opportunities for Western Asset and Oppenheimer Strategic

0.92

Correlation Coefficient

Western Asset  Oppenheimer Strategic

Almost no diversification

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

Pair Corralation between Western Asset and Oppenheimer Strategic

Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Oppenheimer Strategic. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 1.25 times less risky than Oppenheimer Strategic. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Oppenheimer Strategic Income is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  314.00  in Oppenheimer Strategic Income on September 12, 2024 and sell it today you would lose (2.00) from holding Oppenheimer Strategic Income or give up 0.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Western Asset Diversified  vs.  Oppenheimer Strategic Income

Western Asset Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oppenheimer Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Western Asset and Oppenheimer Strategic

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

The idea behind Western Asset Diversified and Oppenheimer Strategic Income 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.