Correlation Between Oakmark Global and Pear Tree

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Can any of the company-specific risk be diversified away by investing in both Oakmark Global and Pear Tree 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 Oakmark Global and Pear Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark Global Fund and Pear Tree Polaris, you can compare the effects of market volatilities on Oakmark Global and Pear Tree 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 Oakmark Global with a short position of Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark Global and Pear Tree.

Diversification Opportunities for Oakmark Global and Pear Tree

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Oakmark and Pear is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Global Fund and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris and Oakmark Global 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 Oakmark Global Fund are associated (or correlated) with Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Oakmark Global i.e., Oakmark Global and Pear Tree go up and down completely randomly.

Pair Corralation between Oakmark Global and Pear Tree

Assuming the 90 days horizon Oakmark Global Fund is expected to generate 0.93 times more return on investment than Pear Tree. However, Oakmark Global Fund is 1.08 times less risky than Pear Tree. It trades about 0.02 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about -0.02 per unit of risk. If you would invest  3,141  in Oakmark Global Fund on October 7, 2024 and sell it today you would earn a total of  106.00  from holding Oakmark Global Fund or generate 3.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Oakmark Global Fund  vs.  Pear Tree Polaris

 Performance 
       Timeline  
Oakmark Global 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Oakmark Global Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Oakmark Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Pear Tree Polaris 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pear Tree Polaris 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Oakmark Global and Pear Tree Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oakmark Global and Pear Tree

The main advantage of trading using opposite Oakmark Global and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark Global position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.
The idea behind Oakmark Global Fund and Pear Tree Polaris 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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