Correlation Between Baron Opportunity and Oakmark Fund

Can any of the company-specific risk be diversified away by investing in both Baron Opportunity and Oakmark Fund 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 Baron Opportunity and Oakmark Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baron Opportunity Fund and Oakmark Fund Investor, you can compare the effects of market volatilities on Baron Opportunity and Oakmark Fund 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 Baron Opportunity with a short position of Oakmark Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Opportunity and Oakmark Fund.

Diversification Opportunities for Baron Opportunity and Oakmark Fund

0.5

Correlation Coefficient

Baron Opportunity  Oakmark Fund

Very weak diversification

The 3 months correlation between Baron and Oakmark is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Baron Opportunity Fund and Oakmark Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Fund Investor and Baron Opportunity 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 Baron Opportunity Fund are associated (or correlated) with Oakmark Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Fund Investor has no effect on the direction of Baron Opportunity i.e., Baron Opportunity and Oakmark Fund go up and down completely randomly.

Pair Corralation between Baron Opportunity and Oakmark Fund

Assuming the 90 days horizon Baron Opportunity Fund is expected to under-perform the Oakmark Fund. In addition to that, Baron Opportunity is 2.06 times more volatile than Oakmark Fund Investor. It trades about -0.12 of its total potential returns per unit of risk. Oakmark Fund Investor is currently generating about 0.05 per unit of volatility. If you would invest  15,175  in Oakmark Fund Investor on December 29, 2024 and sell it today you would earn a total of  347.00  from holding Oakmark Fund Investor or generate 2.29% return on investment over 90 days.

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

Baron Opportunity Fund  vs.  Oakmark Fund Investor

Baron Opportunity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Opportunity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Oakmark Fund Investor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Fund Investor are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Oakmark Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Baron Opportunity and Oakmark Fund

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

The idea behind Baron Opportunity Fund and Oakmark Fund Investor 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.