Correlation Between American High-income and Oppenheimer Roc

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

By analyzing existing cross correlation between American High Income Municipal and Oppenheimer Roc High, you can compare the effects of market volatilities on American High-income and Oppenheimer Roc 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 American High-income with a short position of Oppenheimer Roc. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High-income and Oppenheimer Roc.

Diversification Opportunities for American High-income and Oppenheimer Roc

0.99

Correlation Coefficient

American High-income  Oppenheimer Roc

No risk reduction

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

Pair Corralation between American High-income and Oppenheimer Roc

Assuming the 90 days horizon American High-income is expected to generate 1.18 times less return on investment than Oppenheimer Roc. But when comparing it to its historical volatility, American High Income Municipal is 1.22 times less risky than Oppenheimer Roc. It trades about 0.08 of its potential returns per unit of risk. Oppenheimer Roc High is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  686.00  in Oppenheimer Roc High on September 4, 2024 and sell it today you would earn a total of  11.00  from holding Oppenheimer Roc High or generate 1.6% return on investment over 90 days.

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

American High Income Municipal  vs.  Oppenheimer Roc High

American High Income

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American High Income Municipal are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, American High-income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oppenheimer Roc High

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Roc High are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Oppenheimer Roc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American High-income and Oppenheimer Roc

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

The idea behind American High Income Municipal and Oppenheimer Roc High 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.