Correlation Between Oakmark International and Fidelity Large

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

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

Diversification Opportunities for Oakmark International and Fidelity Large

0.45

Correlation Coefficient

Oakmark International  Fidelity Large

Very weak diversification

The 3 months correlation between Oakmark and Fidelity is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Fund and Fidelity Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Large Cap and Oakmark International 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 International Fund are associated (or correlated) with Fidelity Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Large Cap has no effect on the direction of Oakmark International i.e., Oakmark International and Fidelity Large go up and down completely randomly.

Pair Corralation between Oakmark International and Fidelity Large

Assuming the 90 days horizon Oakmark International Fund is expected to generate 1.37 times more return on investment than Fidelity Large. However, Oakmark International is 1.37 times more volatile than Fidelity Large Cap. It trades about 0.18 of its potential returns per unit of risk. Fidelity Large Cap is currently generating about -0.08 per unit of risk. If you would invest  2,524  in Oakmark International Fund on November 29, 2024 and sell it today you would earn a total of  254.00  from holding Oakmark International Fund or generate 10.06% return on investment over 90 days.

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

Oakmark International Fund  vs.  Fidelity Large Cap

Oakmark International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark International Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Oakmark International may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Fidelity Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oakmark International and Fidelity Large

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

The idea behind Oakmark International Fund and Fidelity Large Cap 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.