Correlation Between Vanguard Wellington and Oakmark Fund

Can any of the company-specific risk be diversified away by investing in both Vanguard Wellington 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 Wellington 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 Wellington Fund and Oakmark Fund Investor, you can compare the effects of market volatilities on Vanguard Wellington 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 Wellington with a short position of Oakmark Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Wellington and Oakmark Fund.

Diversification Opportunities for Vanguard Wellington and Oakmark Fund

0.3

Correlation Coefficient

Vanguard Wellington  Oakmark Fund

Weak diversification

The 3 months correlation between Vanguard and Oakmark is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Wellington 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 Wellington 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 Wellington 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 Wellington i.e., Vanguard Wellington and Oakmark Fund go up and down completely randomly.

Pair Corralation between Vanguard Wellington and Oakmark Fund

Assuming the 90 days horizon Vanguard Wellington Fund is expected to under-perform the Oakmark Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Wellington Fund is 1.28 times less risky than Oakmark Fund. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Oakmark Fund Investor is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15,175  in Oakmark Fund Investor on December 30, 2024 and sell it today you would earn a total of  79.00  from holding Oakmark Fund Investor or generate 0.52% return on investment over 90 days.

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

Vanguard Wellington Fund  vs.  Oakmark Fund Investor

Vanguard Wellington

Risk-Adjusted Performance

Very Weak

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

Oakmark Fund Investor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Fund Investor are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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 Wellington and Oakmark Fund

The main advantage of trading using opposite Vanguard Wellington and Oakmark Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Wellington 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 Wellington 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.