Correlation Between Oakmark International and Lsv Small

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

Diversification Opportunities for Oakmark International and Lsv Small

0.47

Correlation Coefficient

Oakmark International  Lsv Small

Very weak diversification

The 3 months correlation between Oakmark and Lsv is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Small and Lsv Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Small Cap 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 Lsv Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Small Cap has no effect on the direction of Oakmark International i.e., Oakmark International and Lsv Small go up and down completely randomly.

Pair Corralation between Oakmark International and Lsv Small

Assuming the 90 days horizon Oakmark International is expected to generate 2.97 times less return on investment than Lsv Small. But when comparing it to its historical volatility, Oakmark International Small is 1.23 times less risky than Lsv Small. It trades about 0.01 of its potential returns per unit of risk. Lsv Small Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,781  in Lsv Small Cap on December 2, 2024 and sell it today you would earn a total of  70.00  from holding Lsv Small Cap or generate 3.93% 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.  Lsv Small Cap

Oakmark International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oakmark International Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Oakmark International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lsv Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lsv Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 International and Lsv Small

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

The idea behind Oakmark International Small and Lsv Small Cap 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.