Correlation Between Oppenheimer Gold and Europac Gold

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

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

Diversification Opportunities for Oppenheimer Gold and Europac Gold

0.98

Correlation Coefficient

Oppenheimer Gold  Europac Gold

Almost no diversification

The 3 months correlation between Oppenheimer and Europac is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Gold Spec and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold and Oppenheimer 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 Oppenheimer Gold Spec are associated (or correlated) with Europac Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac Gold has no effect on the direction of Oppenheimer Gold i.e., Oppenheimer Gold and Europac Gold go up and down completely randomly.

Pair Corralation between Oppenheimer Gold and Europac Gold

Assuming the 90 days horizon Oppenheimer Gold Spec is expected to generate 0.95 times more return on investment than Europac Gold. However, Oppenheimer Gold Spec is 1.05 times less risky than Europac Gold. It trades about 0.08 of its potential returns per unit of risk. Europac Gold Fund is currently generating about 0.06 per unit of risk. If you would invest  2,637  in Oppenheimer Gold Spec on September 3, 2024 and sell it today you would earn a total of  205.00  from holding Oppenheimer Gold Spec or generate 7.77% return on investment over 90 days.

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

Oppenheimer Gold Spec  vs.  Europac Gold Fund

Oppenheimer Gold Spec

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Gold Spec are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oppenheimer Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Europac Gold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Europac Gold Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Europac Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oppenheimer Gold and Europac Gold

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

The idea behind Oppenheimer Gold Spec and Europac Gold Fund 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.