Correlation Between Wasatch Small and Oakmark International

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

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

Diversification Opportunities for Wasatch Small and Oakmark International

-0.61

Correlation Coefficient

Wasatch Small  Oakmark International

Excellent diversification

The 3 months correlation between Wasatch and Oakmark is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Small Cap and Oakmark International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International and Wasatch Small 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 Wasatch Small Cap are associated (or correlated) with Oakmark International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark International has no effect on the direction of Wasatch Small i.e., Wasatch Small and Oakmark International go up and down completely randomly.

Pair Corralation between Wasatch Small and Oakmark International

Assuming the 90 days horizon Wasatch Small Cap is expected to under-perform the Oakmark International. In addition to that, Wasatch Small is 1.0 times more volatile than Oakmark International Fund. It trades about -0.13 of its total potential returns per unit of risk. Oakmark International Fund is currently generating about 0.18 per unit of volatility. If you would invest  2,476  in Oakmark International Fund on December 23, 2024 and sell it today you would earn a total of  305.00  from holding Oakmark International Fund or generate 12.32% return on investment over 90 days.

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

Wasatch Small Cap  vs.  Oakmark International Fund

Wasatch Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wasatch 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.

Oakmark International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark International Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Oakmark International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wasatch Small and Oakmark International

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

The idea behind Wasatch Small Cap and Oakmark International Fund 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.