Correlation Between Oakmark International and Templeton Foreign

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

Diversification Opportunities for Oakmark International and Templeton Foreign

0.94

Correlation Coefficient

Oakmark International  Templeton Foreign

Almost no diversification

The 3 months correlation between Oakmark and Templeton is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Fund and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign 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 Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Oakmark International i.e., Oakmark International and Templeton Foreign go up and down completely randomly.

Pair Corralation between Oakmark International and Templeton Foreign

Assuming the 90 days horizon Oakmark International Fund is expected to generate 1.13 times more return on investment than Templeton Foreign. However, Oakmark International is 1.13 times more volatile than Templeton Foreign Fund. It trades about 0.13 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.09 per unit of risk. If you would invest  2,518  in Oakmark International Fund on December 2, 2024 and sell it today you would earn a total of  201.00  from holding Oakmark International Fund or generate 7.98% return on investment over 90 days.

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

Oakmark International Fund  vs.  Templeton Foreign Fund

Oakmark International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark International Fund are ranked lower than 10 (%) 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 April 2025.

Templeton Foreign

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Foreign Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Templeton Foreign 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 Templeton Foreign

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

The idea behind Oakmark International Fund and Templeton Foreign Fund 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.