Correlation Between American Beacon and Oakmark International
Can any of the company-specific risk be diversified away by investing in both American Beacon 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 American Beacon and Oakmark International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon International and Oakmark International Fund, you can compare the effects of market volatilities on American Beacon 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 American Beacon with a short position of Oakmark International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Oakmark International.
Diversification Opportunities for American Beacon and Oakmark International
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Oakmark is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon International and Oakmark International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International and American Beacon 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 American Beacon International 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 American Beacon i.e., American Beacon and Oakmark International go up and down completely randomly.
Pair Corralation between American Beacon and Oakmark International
Assuming the 90 days horizon American Beacon International is expected to generate 0.71 times more return on investment than Oakmark International. However, American Beacon International is 1.42 times less risky than Oakmark International. It trades about -0.12 of its potential returns per unit of risk. Oakmark International Fund is currently generating about -0.1 per unit of risk. If you would invest 1,923 in American Beacon International on September 4, 2024 and sell it today you would lose (42.00) from holding American Beacon International or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Beacon International vs. Oakmark International Fund
Performance |
| Timeline |
| American Beacon Inte |
| Oakmark International |
American Beacon and Oakmark International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Oakmark International
The main advantage of trading using opposite American Beacon and Oakmark International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.| American Beacon vs. American Beacon Large | American Beacon vs. Large Pany Value | American Beacon vs. American Beacon Balanced | American Beacon vs. Tcw Relative Value |
| Oakmark International vs. Oakmark International Fund | Oakmark International vs. Oakmark Fund Advisor | Oakmark International vs. Oakmark Select Fund | Oakmark International vs. Oakmark Global Select |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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