Correlation Between Mid Cap and Oppenheimer Main

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

By analyzing existing cross correlation between Mid Cap 15x Strategy and Oppenheimer Main Street, you can compare the effects of market volatilities on Mid Cap and Oppenheimer Main 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 Mid Cap with a short position of Oppenheimer Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Oppenheimer Main.

Diversification Opportunities for Mid Cap and Oppenheimer Main

0.91

Correlation Coefficient

Mid Cap  Oppenheimer Main

Almost no diversification

The 3 months correlation between Mid and Oppenheimer is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Oppenheimer Main Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Main Street and Mid Cap 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 Mid Cap 15x Strategy are associated (or correlated) with Oppenheimer Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Main Street has no effect on the direction of Mid Cap i.e., Mid Cap and Oppenheimer Main go up and down completely randomly.

Pair Corralation between Mid Cap and Oppenheimer Main

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 1.05 times more return on investment than Oppenheimer Main. However, Mid Cap is 1.05 times more volatile than Oppenheimer Main Street. It trades about 0.0 of its potential returns per unit of risk. Oppenheimer Main Street is currently generating about -0.06 per unit of risk. If you would invest  13,340  in Mid Cap 15x Strategy on September 22, 2024 and sell it today you would lose (160.00) from holding Mid Cap 15x Strategy or give up 1.2% of portfolio value over 90 days.

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

Mid Cap 15x Strategy  vs.  Oppenheimer Main Street

Mid Cap 15x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Cap 15x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oppenheimer Main Street

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oppenheimer Main Street has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oppenheimer Main is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid Cap and Oppenheimer Main

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

The idea behind Mid Cap 15x Strategy and Oppenheimer Main Street 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .