Correlation Between Gmo High and Oppenheimer Gold

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Can any of the company-specific risk be diversified away by investing in both Gmo High 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 Gmo High and Oppenheimer Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Oppenheimer Gold Special, you can compare the effects of market volatilities on Gmo High 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 Gmo High with a short position of Oppenheimer Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Oppenheimer Gold.

Diversification Opportunities for Gmo High and Oppenheimer Gold

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Gmo and Oppenheimer is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield 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 Gmo High 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 Gmo High Yield 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 Gmo High i.e., Gmo High and Oppenheimer Gold go up and down completely randomly.

Pair Corralation between Gmo High and Oppenheimer Gold

Assuming the 90 days horizon Gmo High Yield is expected to generate 0.12 times more return on investment than Oppenheimer Gold. However, Gmo High Yield is 8.41 times less risky than Oppenheimer Gold. It trades about 0.04 of its potential returns per unit of risk. Oppenheimer Gold Special is currently generating about -0.29 per unit of risk. If you would invest  1,791  in Gmo High Yield on August 16, 2024 and sell it today you would earn a total of  3.00  from holding Gmo High Yield or generate 0.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Gmo High Yield  vs.  Oppenheimer Gold Special

 Performance 
       Timeline  
Gmo High Yield 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Gmo High Yield are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo High 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

 
Weak
 
Strong
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 fairly strong fundamental indicators, Oppenheimer Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gmo High and Oppenheimer Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gmo High and Oppenheimer Gold

The main advantage of trading using opposite Gmo High and Oppenheimer Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High 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 Gmo High Yield 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.
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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