Correlation Between Oakmark Global and Gmo High
Can any of the company-specific risk be diversified away by investing in both Oakmark Global and Gmo High 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 Gmo High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark Global Select and Gmo High Yield, you can compare the effects of market volatilities on Oakmark Global and Gmo High 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 Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark Global and Gmo High.
Diversification Opportunities for Oakmark Global and Gmo High
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oakmark and Gmo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Global Select and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield 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 Select are associated (or correlated) with Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Oakmark Global i.e., Oakmark Global and Gmo High go up and down completely randomly.
Pair Corralation between Oakmark Global and Gmo High
Assuming the 90 days horizon Oakmark Global Select is expected to generate 3.49 times more return on investment than Gmo High. However, Oakmark Global is 3.49 times more volatile than Gmo High Yield. It trades about 0.16 of its potential returns per unit of risk. Gmo High Yield is currently generating about 0.11 per unit of risk. If you would invest 2,263 in Oakmark Global Select on December 3, 2024 and sell it today you would earn a total of 155.00 from holding Oakmark Global Select or generate 6.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Oakmark Global Select vs. Gmo High Yield
Performance |
Timeline |
Oakmark Global Select |
Risk-Adjusted Performance
Good
Weak | Strong |
Gmo High Yield |
Oakmark Global and Gmo High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oakmark Global and Gmo High
The main advantage of trading using opposite Oakmark Global and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark Global position performs unexpectedly, Gmo High 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 Gmo High will offset losses from the drop in Gmo High's long position.Oakmark Global vs. Inflation Adjusted Bond Fund | Oakmark Global vs. Schwab Treasury Inflation | Oakmark Global vs. The Hartford Inflation | Oakmark Global vs. Federated Hermes Inflation |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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