Correlation Between The Emerging and Oakmark International
Can any of the company-specific risk be diversified away by investing in both The Emerging and Oakmark International 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 The Emerging and Oakmark International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Emerging Markets and Oakmark International Small, you can compare the effects of market volatilities on The Emerging and Oakmark International 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 The Emerging with a short position of Oakmark International. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Emerging and Oakmark International.
Diversification Opportunities for The Emerging and Oakmark International
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between The and Oakmark is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Oakmark International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International and The 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 The Emerging Markets are associated (or correlated) with Oakmark International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark International has no effect on the direction of The Emerging i.e., The Emerging and Oakmark International go up and down completely randomly.
Pair Corralation between The Emerging and Oakmark International
Assuming the 90 days horizon The Emerging is expected to generate 1.94 times less return on investment than Oakmark International. But when comparing it to its historical volatility, The Emerging Markets is 1.13 times less risky than Oakmark International. It trades about 0.1 of its potential returns per unit of risk. Oakmark International Small is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,776 in Oakmark International Small on December 28, 2024 and sell it today you would earn a total of 199.00 from holding Oakmark International Small or generate 11.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
The Emerging Markets vs. Oakmark International Small
Performance |
Timeline |
Emerging Markets |
Oakmark International |
The Emerging and Oakmark International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with The Emerging and Oakmark International
The main advantage of trading using opposite The Emerging and Oakmark International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Emerging position performs unexpectedly, Oakmark International 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 International will offset losses from the drop in Oakmark International's long position.The Emerging vs. Calvert Bond Portfolio | The Emerging vs. Goldman Sachs Short | The Emerging vs. Multisector Bond Sma | The Emerging vs. Federated Municipal Ultrashort |
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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 the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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