Correlation Between Oppenheimer Russell and DOW

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Oppenheimer Russell and DOW 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 Russell and DOW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oppenheimer Russell 1000 and DOW, you can compare the effects of market volatilities on Oppenheimer Russell and DOW 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 Russell with a short position of DOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Russell and DOW.

Diversification Opportunities for Oppenheimer Russell and DOW

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Oppenheimer and DOW is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Russell 1000 and DOW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOW and Oppenheimer Russell 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 Russell 1000 are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Oppenheimer Russell i.e., Oppenheimer Russell and DOW go up and down completely randomly.
    Optimize

Pair Corralation between Oppenheimer Russell and DOW

Given the investment horizon of 90 days Oppenheimer Russell 1000 is expected to generate 0.95 times more return on investment than DOW. However, Oppenheimer Russell 1000 is 1.05 times less risky than DOW. It trades about 0.36 of its potential returns per unit of risk. DOW is currently generating about 0.34 per unit of risk. If you would invest  4,100  in Oppenheimer Russell 1000 on May 13, 2022 and sell it today you would earn a total of  327.00  from holding Oppenheimer Russell 1000 or generate 7.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.65%
ValuesDaily Returns

Oppenheimer Russell 1000  vs.  DOW

 Performance (%) 
       Timeline  

Oppenheimer Russell and DOW Volatility Contrast

   Predicted Return Density   
       Returns  

Oppenheimer Russell 1000

Pair trading matchups for Oppenheimer Russell

Lpl Financial vs. Oppenheimer Russell
First Citizens vs. Oppenheimer Russell
Erie Indemnity vs. Oppenheimer Russell
Bgc Partners vs. Oppenheimer Russell
Bancfirst Corp vs. Oppenheimer Russell
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Oppenheimer Russell as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Oppenheimer Russell's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Oppenheimer Russell's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Oppenheimer Russell 1000.

DOW

Pair trading matchups for DOW

Erie Indemnity vs. DOW
Nasdaq vs. DOW
Starbucks Corp vs. DOW
Boeing vs. DOW
Home Bancshares vs. DOW
Lpl Financial vs. DOW
Bancfirst Corp vs. DOW
Ezcorp vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.

Pair Trading with Oppenheimer Russell and DOW

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

Oppenheimer Russell 1000

Pair trading matchups for Oppenheimer Russell

Boeing vs. Oppenheimer Russell
First Citizens vs. Oppenheimer Russell
Bgc Partners vs. Oppenheimer Russell
Lpl Financial vs. Oppenheimer Russell
Erie Indemnity vs. Oppenheimer Russell
Ezcorp vs. Oppenheimer Russell
Starbucks Corp vs. Oppenheimer Russell
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Oppenheimer Russell as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Oppenheimer Russell's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Oppenheimer Russell's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Oppenheimer Russell 1000.
The idea behind Oppenheimer Russell 1000 and DOW 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.

DOW

Pair trading matchups for DOW

Erie Indemnity vs. DOW
Starbucks Corp vs. DOW
Bancfirst Corp vs. DOW
Nasdaq vs. DOW
Bgc Partners vs. DOW
Lpl Financial vs. DOW
Boeing vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

Other Complementary Tools

Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go
Price Transformation
Use Price Transformation models to analyze depth of different equity instruments across global markets
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Money Managers
Screen money managers from public funds and ETFs managed around the world
Go