Correlation Between Microsoft and Oakmark Fund

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

By analyzing existing cross correlation between Microsoft and Oakmark Fund R6, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Oakmark Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Oakmark Fund.

Diversification Opportunities for Microsoft and Oakmark Fund

0.32

Correlation Coefficient

Microsoft  Oakmark Fund

Weak diversification

The 3 months correlation between Microsoft and Oakmark is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Oakmark Fund R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Fund R6 and Microsoft 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 Microsoft 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 R6 has no effect on the direction of Microsoft i.e., Microsoft and Oakmark Fund go up and down completely randomly.

Pair Corralation between Microsoft and Oakmark Fund

Given the investment horizon of 90 days Microsoft is expected to under-perform the Oakmark Fund. In addition to that, Microsoft is 1.83 times more volatile than Oakmark Fund R6. It trades about -0.11 of its total potential returns per unit of risk. Oakmark Fund R6 is currently generating about 0.02 per unit of volatility. If you would invest  15,174  in Oakmark Fund R6 on December 29, 2024 and sell it today you would earn a total of  89.00  from holding Oakmark Fund R6 or generate 0.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Microsoft  vs.  Oakmark Fund R6

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Oakmark Fund R6

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Fund R6 are ranked lower than 1 (%) 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 Microsoft and Oakmark Fund

The main advantage of trading using opposite Microsoft and Oakmark Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft and Oakmark Fund R6 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.