Correlation Between State Street and Oppenheimer Developing
Can any of the company-specific risk be diversified away by investing in both State Street and Oppenheimer Developing 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 State Street and Oppenheimer Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Emerging and Oppenheimer Developing Markets, you can compare the effects of market volatilities on State Street and Oppenheimer Developing 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 State Street with a short position of Oppenheimer Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Oppenheimer Developing.
Diversification Opportunities for State Street and Oppenheimer Developing
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between State and Oppenheimer is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding State Street Emerging and Oppenheimer Developing Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Developing and State Street 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 State Street Emerging are associated (or correlated) with Oppenheimer Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Developing has no effect on the direction of State Street i.e., State Street and Oppenheimer Developing go up and down completely randomly.
Pair Corralation between State Street and Oppenheimer Developing
Assuming the 90 days horizon State Street Emerging is expected to generate 1.15 times more return on investment than Oppenheimer Developing. However, State Street is 1.15 times more volatile than Oppenheimer Developing Markets. It trades about -0.11 of its potential returns per unit of risk. Oppenheimer Developing Markets is currently generating about -0.23 per unit of risk. If you would invest 6,289 in State Street Emerging on January 20, 2024 and sell it today you would lose (112.00) from holding State Street Emerging or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
State Street Emerging vs. Oppenheimer Developing Markets
Performance |
| Timeline |
| State Street Emerging |
| Oppenheimer Developing |
State Street and Oppenheimer Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Oppenheimer Developing
The main advantage of trading using opposite State Street and Oppenheimer Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Oppenheimer Developing 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 Developing will offset losses from the drop in Oppenheimer Developing's long position.| State Street vs. Vanguard Emerging Markets | State Street vs. American Funds New | State Street vs. American Funds New | State Street vs. New World Fund |
| Oppenheimer Developing vs. Gmo Resources | Oppenheimer Developing vs. Jennison Natural Resources | Oppenheimer Developing vs. World Energy Fund | Oppenheimer Developing vs. Energy Basic Materials |
Check out your portfolio center.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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