Correlation Between Driehaus Emerging and Oppenheimer Developing

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

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

Diversification Opportunities for Driehaus Emerging and Oppenheimer Developing

0.92

Correlation Coefficient

Driehaus Emerging  Oppenheimer Developing

Almost no diversification

The 3 months correlation between Driehaus and Oppenheimer is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Driehaus Emerging Markets and Oppenheimer Developing Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Developing and Driehaus Emerging 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 Driehaus Emerging Markets 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 Driehaus Emerging i.e., Driehaus Emerging and Oppenheimer Developing go up and down completely randomly.

Pair Corralation between Driehaus Emerging and Oppenheimer Developing

Assuming the 90 days horizon Driehaus Emerging Markets is expected to generate 0.98 times more return on investment than Oppenheimer Developing. However, Driehaus Emerging Markets is 1.02 times less risky than Oppenheimer Developing. It trades about 0.07 of its potential returns per unit of risk. Oppenheimer Developing Markets is currently generating about -0.03 per unit of risk. If you would invest  2,049  in Driehaus Emerging Markets on January 30, 2024 and sell it today you would earn a total of  21.00  from holding Driehaus Emerging Markets or generate 1.02% return on investment over 90 days.

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

Driehaus Emerging Markets  vs.  Oppenheimer Developing Markets

Driehaus Emerging Markets

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Driehaus Emerging Markets are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Driehaus Emerging may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Oppenheimer Developing

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Driehaus Emerging and Oppenheimer Developing

The main advantage of trading using opposite Driehaus Emerging and Oppenheimer Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Driehaus Emerging 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.

The idea behind Driehaus Emerging Markets and Oppenheimer Developing Markets 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 Commodity Directory module to find actively traded commodities issued by global exchanges.