Correlation Between Invesco High and Oppenheimer Target

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

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

Diversification Opportunities for Invesco High and Oppenheimer Target

0.79

Correlation Coefficient

Invesco High  Oppenheimer Target

Poor diversification

The 3 months correlation between Invesco and Oppenheimer is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Yield and Oppenheimer Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Target and Invesco High 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 High Yield are associated (or correlated) with Oppenheimer Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Target has no effect on the direction of Invesco High i.e., Invesco High and Oppenheimer Target go up and down completely randomly.

Pair Corralation between Invesco High and Oppenheimer Target

Assuming the 90 days horizon Invesco High is expected to generate 6.32 times less return on investment than Oppenheimer Target. But when comparing it to its historical volatility, Invesco High Yield is 5.77 times less risky than Oppenheimer Target. It trades about 0.18 of its potential returns per unit of risk. Oppenheimer Target is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,950  in Oppenheimer Target on September 2, 2024 and sell it today you would earn a total of  511.00  from holding Oppenheimer Target or generate 12.94% return on investment over 90 days.

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

Invesco High Yield  vs.  Oppenheimer Target

Invesco High Yield

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Yield are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Invesco High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oppenheimer Target

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Target are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Oppenheimer Target may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Invesco High and Oppenheimer Target

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

The idea behind Invesco High Yield and Oppenheimer Target 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.