Correlation Between Oakmark Fund and Oakmark International

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

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

Diversification Opportunities for Oakmark Fund and Oakmark International

-0.61

Correlation Coefficient

Oakmark Fund  Oakmark International

Excellent diversification

The 3 months correlation between Oakmark and Oakmark is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Fund Investor and Oakmark International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International and Oakmark Fund 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 Fund Investor 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 Oakmark Fund i.e., Oakmark Fund and Oakmark International go up and down completely randomly.

Pair Corralation between Oakmark Fund and Oakmark International

Assuming the 90 days horizon Oakmark Fund Investor is expected to generate 0.95 times more return on investment than Oakmark International. However, Oakmark Fund Investor is 1.06 times less risky than Oakmark International. It trades about 0.09 of its potential returns per unit of risk. Oakmark International is currently generating about 0.02 per unit of risk. If you would invest  10,159  in Oakmark Fund Investor on September 24, 2024 and sell it today you would earn a total of  5,043  from holding Oakmark Fund Investor or generate 49.64% return on investment over 90 days.

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

Oakmark Fund Investor  vs.  Oakmark International

Oakmark Fund Investor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Fund Investor are ranked lower than 2 (%) 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.

Oakmark International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakmark International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Oakmark Fund and Oakmark International

The main advantage of trading using opposite Oakmark Fund and Oakmark International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark Fund 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 idea behind Oakmark Fund Investor and Oakmark International 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.