Correlation Between Oppenheimer Strategic and Invesco Income

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

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

Diversification Opportunities for Oppenheimer Strategic and Invesco Income

0.67

Correlation Coefficient

Oppenheimer Strategic  Invesco Income

Poor diversification

The 3 months correlation between Oppenheimer and Invesco is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Strategic Income and Invesco Income Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Me Allocation and Oppenheimer Strategic 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 Strategic Income are associated (or correlated) with Invesco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Me Allocation has no effect on the direction of Oppenheimer Strategic i.e., Oppenheimer Strategic and Invesco Income go up and down completely randomly.

Pair Corralation between Oppenheimer Strategic and Invesco Income

Assuming the 90 days horizon Oppenheimer Strategic Income is expected to under-perform the Invesco Income. In addition to that, Oppenheimer Strategic is 1.41 times more volatile than Invesco Income Allocation. It trades about -0.13 of its total potential returns per unit of risk. Invesco Income Allocation is currently generating about -0.17 per unit of volatility. If you would invest  1,036  in Invesco Income Allocation on January 31, 2024 and sell it today you would lose (15.00) from holding Invesco Income Allocation or give up 1.45% of portfolio value over 90 days.

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

Oppenheimer Strategic Income  vs.  Invesco Income Allocation

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.

Invesco Me Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Oppenheimer Strategic and Invesco Income

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

The idea behind Oppenheimer Strategic Income and Invesco Income Allocation 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.