Correlation Between Pinnacle Sherman and Oakmark Select

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

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

Diversification Opportunities for Pinnacle Sherman and Oakmark Select

0.97

Correlation Coefficient

Pinnacle Sherman  Oakmark Select

Almost no diversification

The 3 months correlation between Pinnacle and Oakmark is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Sherman Multi Strateg and Oakmark Select Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Select and Pinnacle Sherman 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 Pinnacle Sherman Multi Strategy are associated (or correlated) with Oakmark Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Select has no effect on the direction of Pinnacle Sherman i.e., Pinnacle Sherman and Oakmark Select go up and down completely randomly.

Pair Corralation between Pinnacle Sherman and Oakmark Select

Assuming the 90 days horizon Pinnacle Sherman Multi Strategy is expected to generate 1.16 times more return on investment than Oakmark Select. However, Pinnacle Sherman is 1.16 times more volatile than Oakmark Select Fund. It trades about -0.22 of its potential returns per unit of risk. Oakmark Select Fund is currently generating about -0.3 per unit of risk. If you would invest  1,464  in Pinnacle Sherman Multi Strategy on September 24, 2024 and sell it today you would lose (71.00) from holding Pinnacle Sherman Multi Strategy or give up 4.85% of portfolio value over 90 days.

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

Pinnacle Sherman Multi Strateg  vs.  Oakmark Select Fund

Pinnacle Sherman Multi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Sherman Multi Strategy are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Pinnacle Sherman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oakmark Select

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Select Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Oakmark Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pinnacle Sherman and Oakmark Select

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

The idea behind Pinnacle Sherman Multi Strategy and Oakmark Select Fund 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.