Correlation Between T Rowe and Oppenheimer Gold

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

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

Diversification Opportunities for T Rowe and Oppenheimer Gold

-0.4

Correlation Coefficient

T Rowe  Oppenheimer Gold

Very good diversification

The 3 months correlation between PRNHX and Oppenheimer is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Oppenheimer Gold Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Gold Special and T Rowe 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 T Rowe Price are associated (or correlated) with Oppenheimer Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Gold Special has no effect on the direction of T Rowe i.e., T Rowe and Oppenheimer Gold go up and down completely randomly.

Pair Corralation between T Rowe and Oppenheimer Gold

Assuming the 90 days horizon T Rowe Price is expected to generate 0.63 times more return on investment than Oppenheimer Gold. However, T Rowe Price is 1.58 times less risky than Oppenheimer Gold. It trades about 0.05 of its potential returns per unit of risk. Oppenheimer Gold Special is currently generating about -0.13 per unit of risk. If you would invest  5,515  in T Rowe Price on September 26, 2024 and sell it today you would earn a total of  185.00  from holding T Rowe Price or generate 3.35% return on investment over 90 days.

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

T Rowe Price  vs.  Oppenheimer Gold Special

T Rowe Price

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, T Rowe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oppenheimer Gold Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oppenheimer Gold Special has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with T Rowe and Oppenheimer Gold

The main advantage of trading using opposite T Rowe and Oppenheimer Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Oppenheimer 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 Oppenheimer Gold will offset losses from the drop in Oppenheimer Gold's long position.

The idea behind T Rowe Price and Oppenheimer Gold Special 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.