Correlation Between Vanguard Explorer and Oakmark Fund

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

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

Diversification Opportunities for Vanguard Explorer and Oakmark Fund

0.31

Correlation Coefficient

Vanguard Explorer  Oakmark Fund

Weak diversification

The 3 months correlation between Vanguard and Oakmark is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and Oakmark Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Fund Investor and Vanguard Explorer 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 Vanguard Explorer Fund are associated (or correlated) with Oakmark Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Fund Investor has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and Oakmark Fund go up and down completely randomly.

Pair Corralation between Vanguard Explorer and Oakmark Fund

Assuming the 90 days horizon Vanguard Explorer Fund is expected to under-perform the Oakmark Fund. In addition to that, Vanguard Explorer is 1.74 times more volatile than Oakmark Fund Investor. It trades about -0.2 of its total potential returns per unit of risk. Oakmark Fund Investor is currently generating about -0.01 per unit of volatility. If you would invest  16,009  in Oakmark Fund Investor on December 1, 2024 and sell it today you would lose (93.00) from holding Oakmark Fund Investor or give up 0.58% of portfolio value over 90 days.

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

Vanguard Explorer Fund  vs.  Oakmark Fund Investor

Vanguard Explorer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Explorer Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Oakmark Fund Investor

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vanguard Explorer and Oakmark Fund

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

The idea behind Vanguard Explorer Fund and Oakmark Fund Investor 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.