Correlation Between Vanguard Reit and Oakmark Bond

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

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

Diversification Opportunities for Vanguard Reit and Oakmark Bond

0.77

Correlation Coefficient

Vanguard Reit  Oakmark Bond

Poor diversification

The 3 months correlation between Vanguard and Oakmark is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Reit Index and Oakmark Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Bond and Vanguard Reit 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 Reit Index are associated (or correlated) with Oakmark Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Bond has no effect on the direction of Vanguard Reit i.e., Vanguard Reit and Oakmark Bond go up and down completely randomly.

Pair Corralation between Vanguard Reit and Oakmark Bond

Assuming the 90 days horizon Vanguard Reit Index is expected to under-perform the Oakmark Bond. In addition to that, Vanguard Reit is 3.62 times more volatile than Oakmark Bond. It trades about -0.1 of its total potential returns per unit of risk. Oakmark Bond is currently generating about -0.16 per unit of volatility. If you would invest  897.00  in Oakmark Bond on October 10, 2024 and sell it today you would lose (25.00) from holding Oakmark Bond or give up 2.79% of portfolio value over 90 days.

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

Vanguard Reit Index  vs.  Oakmark Bond

Vanguard Reit Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Reit Index 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.

Oakmark Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakmark Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Oakmark Bond 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 Reit and Oakmark Bond

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

The idea behind Vanguard Reit Index and Oakmark Bond 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..