Correlation Between Oppenheimer Glabal and American Funds

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

By analyzing existing cross correlation between Oppenheimer Glabal A and American Funds Global, you can compare the effects of market volatilities on Oppenheimer Glabal and American Funds 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 Oppenheimer Glabal with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Glabal and American Funds.

Diversification Opportunities for Oppenheimer Glabal and American Funds

0.98

Correlation Coefficient

Oppenheimer Glabal  American Funds

Almost no diversification

The 3 months correlation between Oppenheimer and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Glabal A and American Funds Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Global and Oppenheimer Glabal 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 Oppenheimer Glabal A are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Global has no effect on the direction of Oppenheimer Glabal i.e., Oppenheimer Glabal and American Funds go up and down completely randomly.

Pair Corralation between Oppenheimer Glabal and American Funds

Assuming the 90 days horizon Oppenheimer Glabal A is expected to under-perform the American Funds. In addition to that, Oppenheimer Glabal is 1.14 times more volatile than American Funds Global. It trades about -0.15 of its total potential returns per unit of risk. American Funds Global is currently generating about -0.04 per unit of volatility. If you would invest  2,126  in American Funds Global on January 16, 2024 and sell it today you would lose (14.00) from holding American Funds Global or give up 0.66% of portfolio value over 90 days.

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

Oppenheimer Glabal A  vs.  American Funds Global

Oppenheimer Glabal

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Glabal A are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oppenheimer Glabal may actually be approaching a critical reversion point that can send shares even higher in May 2024.

American Funds Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds Global are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, American Funds may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Oppenheimer Glabal and American Funds

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

The idea behind Oppenheimer Glabal A and American Funds Global 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 Transaction History module to view history of all your transactions and understand their impact on performance.