Correlation Between Oppenheimer Target and Invesco Energy

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

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

Diversification Opportunities for Oppenheimer Target and Invesco Energy

0.53

Correlation Coefficient

Oppenheimer Target  Invesco Energy

Very weak diversification

The 3 months correlation between Oppenheimer and Invesco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Target and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy and Oppenheimer Target 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 Target are associated (or correlated) with Invesco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Energy has no effect on the direction of Oppenheimer Target i.e., Oppenheimer Target and Invesco Energy go up and down completely randomly.

Pair Corralation between Oppenheimer Target and Invesco Energy

Assuming the 90 days horizon Oppenheimer Target is expected to generate 0.88 times more return on investment than Invesco Energy. However, Oppenheimer Target is 1.13 times less risky than Invesco Energy. It trades about 0.18 of its potential returns per unit of risk. Invesco Energy Fund is currently generating about 0.12 per unit of risk. If you would invest  4,067  in Oppenheimer Target on September 12, 2024 and sell it today you would earn a total of  449.00  from holding Oppenheimer Target or generate 11.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Oppenheimer Target  vs.  Invesco Energy Fund

Oppenheimer Target

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Target are ranked lower than 14 (%) 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.

Invesco Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Energy Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Invesco Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oppenheimer Target and Invesco Energy

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

The idea behind Oppenheimer Target and Invesco Energy 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.