Correlation Between Barings Active and Oakmark Select
Can any of the company-specific risk be diversified away by investing in both Barings Active and Oakmark Select 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 Barings Active and Oakmark Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and Oakmark Select Fund, you can compare the effects of market volatilities on Barings Active and Oakmark Select 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 Barings Active with a short position of Oakmark Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Oakmark Select.
Diversification Opportunities for Barings Active and Oakmark Select
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Oakmark is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Oakmark Select Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Select and Barings Active 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 Barings Active Short are associated (or correlated) with Oakmark Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Select has no effect on the direction of Barings Active i.e., Barings Active and Oakmark Select go up and down completely randomly.
Pair Corralation between Barings Active and Oakmark Select
Assuming the 90 days horizon Barings Active is expected to generate 2.6 times less return on investment than Oakmark Select. But when comparing it to its historical volatility, Barings Active Short is 6.49 times less risky than Oakmark Select. It trades about 0.22 of its potential returns per unit of risk. Oakmark Select Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,995 in Oakmark Select Fund on September 14, 2024 and sell it today you would earn a total of 1,400 from holding Oakmark Select Fund or generate 20.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Oakmark Select Fund
Performance |
| Timeline |
| Barings Active Short |
| Oakmark Select |
Barings Active and Oakmark Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Oakmark Select
The main advantage of trading using opposite Barings Active and Oakmark Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Oakmark Select 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 Select will offset losses from the drop in Oakmark Select's long position.| Barings Active vs. Champlain Small | Barings Active vs. Franklin Small Cap | Barings Active vs. Touchstone Small Cap | Barings Active vs. Df Dent Small |
| Oakmark Select vs. Counterpoint Tactical Municipal | Oakmark Select vs. Blrc Sgy Mnp | Oakmark Select vs. Franklin High Yield | Oakmark Select vs. Morningstar Municipal Bond |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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