Correlation Between American Funds and Oakmark Select
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Oakmark Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Oakmark Select, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Oakmark Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Oakmark Select.
Diversification Opportunities for American Funds and Oakmark Select
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Oakmark is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Oakmark Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Select and American Funds 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 Funds American 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 American Funds i.e., American Funds and Oakmark Select go up and down completely randomly.
Pair Corralation between American Funds and Oakmark Select
Assuming the 90 days horizon American Funds is expected to generate 1.26 times less return on investment than Oakmark Select. But when comparing it to its historical volatility, American Funds American is 1.53 times less risky than Oakmark Select. It trades about 0.13 of its potential returns per unit of risk. Oakmark Select is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,072 in Oakmark Select on September 1, 2024 and sell it today you would earn a total of 1,397 from holding Oakmark Select or generate 19.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
American Funds American vs. Oakmark Select
Performance |
| Timeline |
| American Funds American |
| Oakmark Select |
American Funds and Oakmark Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Oakmark Select
The main advantage of trading using opposite American Funds and Oakmark Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Vanguard Developed Markets | American Funds vs. Pnc Emerging Markets | American Funds vs. Transamerica Emerging Markets | American Funds vs. Ep Emerging Markets |
| Oakmark Select vs. T Rowe Price | Oakmark Select vs. T Rowe Price | Oakmark Select vs. Wasatch Global Opportunities | Oakmark Select vs. Federated Global Allocation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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