Correlation Between Oppenhmr Discovery and Small Cap

Can any of the company-specific risk be diversified away by investing in both Oppenhmr Discovery and Small Cap 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 Oppenhmr Discovery and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oppenhmr Discovery Mid and Small Cap Stock, you can compare the effects of market volatilities on Oppenhmr Discovery and Small Cap 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 Oppenhmr Discovery with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenhmr Discovery and Small Cap.

Diversification Opportunities for Oppenhmr Discovery and Small Cap

0.84

Correlation Coefficient

Oppenhmr Discovery  Small Cap

Very poor diversification

The 3 months correlation between Oppenhmr and Small is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Oppenhmr Discovery Mid and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock and Oppenhmr Discovery 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 Oppenhmr Discovery Mid are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Oppenhmr Discovery i.e., Oppenhmr Discovery and Small Cap go up and down completely randomly.

Pair Corralation between Oppenhmr Discovery and Small Cap

Assuming the 90 days horizon Oppenhmr Discovery Mid is expected to generate 0.99 times more return on investment than Small Cap. However, Oppenhmr Discovery Mid is 1.01 times less risky than Small Cap. It trades about -0.32 of its potential returns per unit of risk. Small Cap Stock is currently generating about -0.38 per unit of risk. If you would invest  3,861  in Oppenhmr Discovery Mid on September 23, 2024 and sell it today you would lose (402.00) from holding Oppenhmr Discovery Mid or give up 10.41% of portfolio value over 90 days.

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

Oppenhmr Discovery Mid  vs.  Small Cap Stock

Oppenhmr Discovery Mid

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenhmr Discovery Mid are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Oppenhmr Discovery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Small Cap Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Small Cap Stock 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.

Pair Trading with Oppenhmr Discovery and Small Cap

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

The idea behind Oppenhmr Discovery Mid and Small Cap Stock 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.