Correlation Between Vanguard Small-cap and Oppenheimer Main

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Can any of the company-specific risk be diversified away by investing in both Vanguard Small-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 Vanguard Small-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 Vanguard Small Cap Index and Oppenheimer Main Street, you can compare the effects of market volatilities on Vanguard Small-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 Vanguard Small-cap with a short position of Oppenheimer Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Oppenheimer Main.

Diversification Opportunities for Vanguard Small-cap and Oppenheimer Main

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Vanguard and Oppenheimer is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding VANGUARD SMALL-CAP INDEX 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 Vanguard Small-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 Vanguard Small Cap Index 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 Vanguard Small-cap i.e., Vanguard Small-cap and Oppenheimer Main go up and down completely randomly.

Pair Corralation between Vanguard Small-cap and Oppenheimer Main

Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 0.91 times more return on investment than Oppenheimer Main. However, Vanguard Small Cap Index is 1.1 times less risky than Oppenheimer Main. It trades about 0.07 of its potential returns per unit of risk. Oppenheimer Main Street is currently generating about 0.04 per unit of risk. If you would invest  10,055  in Vanguard Small Cap Index on November 24, 2023 and sell it today you would earn a total of  181.00  from holding Vanguard Small Cap Index or generate 1.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

VANGUARD SMALL-CAP INDEX  vs.  Oppenheimer Main Street

 Performance 
       Timeline  
Vanguard Small-cap Index 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Index are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Small-cap may actually be approaching a critical reversion point that can send shares even higher in March 2024.
Oppenheimer Main Street 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Main Street are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oppenheimer Main may actually be approaching a critical reversion point that can send shares even higher in March 2024.

Vanguard Small-cap and Oppenheimer Main Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Small-cap and Oppenheimer Main

The main advantage of trading using opposite Vanguard Small-cap and Oppenheimer Main positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-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 Vanguard Small Cap Index 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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