Correlation Between Oakmark Select and Oakmark International

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

Diversification Opportunities for Oakmark Select and Oakmark International

-0.76

Correlation Coefficient

Oakmark Select  Oakmark International

Pay attention - limited upside

The 3 months correlation between Oakmark and Oakmark is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Select Fund and Oakmark International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International 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 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 Select i.e., Oakmark Select and Oakmark International go up and down completely randomly.

Pair Corralation between Oakmark Select and Oakmark International

Assuming the 90 days horizon Oakmark Select Fund is expected to under-perform the Oakmark International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Oakmark Select Fund is 1.1 times less risky than Oakmark International. The mutual fund trades about -0.23 of its potential returns per unit of risk. The Oakmark International Fund is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  2,564  in Oakmark International Fund on September 25, 2024 and sell it today you would lose (87.00) from holding Oakmark International Fund or give up 3.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Oakmark Select Fund  vs.  Oakmark International Fund

Oakmark Select

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Select Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Oakmark Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Oakmark Select and Oakmark International

The main advantage of trading using opposite Oakmark Select and Oakmark International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark Select 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 Select Fund and Oakmark International 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.