Correlation Between Templeton Developing and Oppenheimer Target

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

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

Diversification Opportunities for Templeton Developing and Oppenheimer Target

0.29

Correlation Coefficient

Templeton Developing  Oppenheimer Target

Modest diversification

The 3 months correlation between Templeton and Oppenheimer is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Oppenheimer Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Target and Templeton Developing 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 Templeton Developing Markets are associated (or correlated) with Oppenheimer Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Target has no effect on the direction of Templeton Developing i.e., Templeton Developing and Oppenheimer Target go up and down completely randomly.

Pair Corralation between Templeton Developing and Oppenheimer Target

Assuming the 90 days horizon Templeton Developing Markets is expected to under-perform the Oppenheimer Target. But the mutual fund apears to be less risky and, when comparing its historical volatility, Templeton Developing Markets is 1.06 times less risky than Oppenheimer Target. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Oppenheimer Target is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  4,210  in Oppenheimer Target on September 4, 2024 and sell it today you would earn a total of  276.00  from holding Oppenheimer Target or generate 6.56% return on investment over 90 days.

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

Templeton Developing Markets  vs.  Oppenheimer Target

Templeton Developing

Risk-Adjusted Performance

3 of 100

Insignificant

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

Oppenheimer Target

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Target are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Oppenheimer Target showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Templeton Developing and Oppenheimer Target

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

The idea behind Templeton Developing Markets and Oppenheimer Target 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.