Correlation Between Global Gold and Oppenheimer International

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

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

Diversification Opportunities for Global Gold and Oppenheimer International

0.14

Correlation Coefficient

Global Gold  Oppenheimer International

Average diversification

The 3 months correlation between Global and Oppenheimer is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Oppenheimer International Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer International and Global Gold 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 Global Gold Fund are associated (or correlated) with Oppenheimer International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer International has no effect on the direction of Global Gold i.e., Global Gold and Oppenheimer International go up and down completely randomly.

Pair Corralation between Global Gold and Oppenheimer International

Assuming the 90 days horizon Global Gold Fund is expected to under-perform the Oppenheimer International. In addition to that, Global Gold is 4.56 times more volatile than Oppenheimer International Bond. It trades about -0.1 of its total potential returns per unit of risk. Oppenheimer International Bond is currently generating about -0.12 per unit of volatility. If you would invest  446.00  in Oppenheimer International Bond on September 30, 2024 and sell it today you would lose (14.00) from holding Oppenheimer International Bond or give up 3.14% of portfolio value over 90 days.

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

Global Gold Fund  vs.  Oppenheimer International Bond

Global Gold Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Oppenheimer International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Global Gold and Oppenheimer International

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

The idea behind Global Gold Fund and Oppenheimer International Bond 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.