Correlation Between Oakmark International and Inflation Protected

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

By analyzing existing cross correlation between Oakmark International Small and Inflation Protected Bond Fund, you can compare the effects of market volatilities on Oakmark International and Inflation Protected 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 Inflation Protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and Inflation Protected.

Diversification Opportunities for Oakmark International and Inflation Protected

0.51

Correlation Coefficient

Oakmark International  Inflation Protected

Very weak diversification

The 3 months correlation between Oakmark and Inflation is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Small and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Small are associated (or correlated) with Inflation Protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Oakmark International i.e., Oakmark International and Inflation Protected go up and down completely randomly.

Pair Corralation between Oakmark International and Inflation Protected

Assuming the 90 days horizon Oakmark International Small is expected to generate 2.52 times more return on investment than Inflation Protected. However, Oakmark International is 2.52 times more volatile than Inflation Protected Bond Fund. It trades about 0.17 of its potential returns per unit of risk. Inflation Protected Bond Fund is currently generating about -0.01 per unit of risk. If you would invest  1,790  in Oakmark International Small on December 27, 2024 and sell it today you would earn a total of  198.00  from holding Oakmark International Small or generate 11.06% return on investment over 90 days.

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

Oakmark International Small  vs.  Inflation Protected Bond Fund

Oakmark International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark International Small are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Oakmark International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Inflation Protected

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inflation Protected Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Inflation Protected 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 Inflation Protected

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

The idea behind Oakmark International Small and Inflation Protected Bond 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.