Correlation Between Oakmark International and Pimco Rae

Can any of the company-specific risk be diversified away by investing in both Oakmark International and Pimco Rae 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 Pimco Rae 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 Pimco Rae Fundamental, you can compare the effects of market volatilities on Oakmark International and Pimco Rae 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 Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and Pimco Rae.

Diversification Opportunities for Oakmark International and Pimco Rae

0.92

Correlation Coefficient

Oakmark International  Pimco Rae

Almost no diversification

The 3 months correlation between Oakmark and Pimco is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Fund and Pimco Rae Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Fundamental 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 Pimco Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Fundamental has no effect on the direction of Oakmark International i.e., Oakmark International and Pimco Rae go up and down completely randomly.

Pair Corralation between Oakmark International and Pimco Rae

Assuming the 90 days horizon Oakmark International Fund is expected to under-perform the Pimco Rae. In addition to that, Oakmark International is 1.16 times more volatile than Pimco Rae Fundamental. It trades about -0.02 of its total potential returns per unit of risk. Pimco Rae Fundamental is currently generating about -0.01 per unit of volatility. If you would invest  919.00  in Pimco Rae Fundamental on October 7, 2024 and sell it today you would lose (22.00) from holding Pimco Rae Fundamental or give up 2.39% of portfolio value over 90 days.

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

Oakmark International Fund  vs.  Pimco Rae Fundamental

Oakmark International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakmark International Fund 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.

Pimco Rae Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Rae Fundamental 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 forward 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.

Pair Trading with Oakmark International and Pimco Rae

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

The idea behind Oakmark International Fund and Pimco Rae Fundamental 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.