Correlation Between Oakmark Select and Jhancock Real

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

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

Diversification Opportunities for Oakmark Select and Jhancock Real

0.39

Correlation Coefficient

Oakmark Select  Jhancock Real

Weak diversification

The 3 months correlation between Oakmark and Jhancock is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Select Fund and Jhancock Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Real Estate and Oakmark Select 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 Select Fund are associated (or correlated) with Jhancock Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Real Estate has no effect on the direction of Oakmark Select i.e., Oakmark Select and Jhancock Real go up and down completely randomly.

Pair Corralation between Oakmark Select and Jhancock Real

Assuming the 90 days horizon Oakmark Select Fund is expected to generate 0.95 times more return on investment than Jhancock Real. However, Oakmark Select Fund is 1.05 times less risky than Jhancock Real. It trades about 0.1 of its potential returns per unit of risk. Jhancock Real Estate is currently generating about 0.04 per unit of risk. If you would invest  4,924  in Oakmark Select Fund on September 23, 2024 and sell it today you would earn a total of  3,089  from holding Oakmark Select Fund or generate 62.73% return on investment over 90 days.

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

Oakmark Select Fund  vs.  Jhancock Real Estate

Oakmark Select

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Select Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Oakmark Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jhancock Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jhancock Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's fundamental drivers 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 Select and Jhancock Real

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

The idea behind Oakmark Select Fund and Jhancock Real Estate 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.