Correlation Between Invesco Small and Oppenheimer Strategic

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

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

Diversification Opportunities for Invesco Small and Oppenheimer Strategic

-0.23

Correlation Coefficient

Invesco Small  Oppenheimer Strategic

Very good diversification

The 3 months correlation between Invesco and Oppenheimer is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Small Cap and Oppenheimer Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Strategic and Invesco Small 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 Invesco Small Cap are associated (or correlated) with Oppenheimer Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Strategic has no effect on the direction of Invesco Small i.e., Invesco Small and Oppenheimer Strategic go up and down completely randomly.

Pair Corralation between Invesco Small and Oppenheimer Strategic

Assuming the 90 days horizon Invesco Small Cap is expected to generate 4.64 times more return on investment than Oppenheimer Strategic. However, Invesco Small is 4.64 times more volatile than Oppenheimer Strategic Income. It trades about -0.02 of its potential returns per unit of risk. Oppenheimer Strategic Income is currently generating about -0.17 per unit of risk. If you would invest  2,655  in Invesco Small Cap on September 30, 2024 and sell it today you would lose (66.00) from holding Invesco Small Cap or give up 2.49% of portfolio value over 90 days.

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

Invesco Small Cap  vs.  Oppenheimer Strategic Income

Invesco Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oppenheimer Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Invesco Small and Oppenheimer Strategic

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

The idea behind Invesco Small Cap and Oppenheimer Strategic Income 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.