Correlation Between Oakmark International and The Emerging
Can any of the company-specific risk be diversified away by investing in both Oakmark International and The Emerging 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 The Emerging 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 The Emerging Markets, you can compare the effects of market volatilities on Oakmark International and The Emerging 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 The Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and The Emerging.
Diversification Opportunities for Oakmark International and The Emerging
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oakmark and The is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Small and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 The Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Oakmark International i.e., Oakmark International and The Emerging go up and down completely randomly.
Pair Corralation between Oakmark International and The Emerging
Assuming the 90 days horizon Oakmark International Small is expected to under-perform the The Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Oakmark International Small is 1.14 times less risky than The Emerging. The mutual fund trades about -0.07 of its potential returns per unit of risk. The The Emerging Markets is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,843 in The Emerging Markets on September 3, 2024 and sell it today you would earn a total of 24.00 from holding The Emerging Markets or generate 1.3% 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. The Emerging Markets
Performance |
Timeline |
Oakmark International |
Emerging Markets |
Oakmark International and The Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oakmark International and The Emerging
The main advantage of trading using opposite Oakmark International and The Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International position performs unexpectedly, The Emerging 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 The Emerging will offset losses from the drop in The Emerging's long position.Oakmark International vs. The Emerging Markets | Oakmark International vs. Nasdaq 100 2x Strategy | Oakmark International vs. Barings Emerging Markets | Oakmark International vs. Artisan Emerging Markets |
The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard 500 Index | The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard Total Stock |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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