Correlation Between Oakmark International and Dfa International
Can any of the company-specific risk be diversified away by investing in both Oakmark International and Dfa 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 Oakmark International and Dfa International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark International Small and Dfa International Small, you can compare the effects of market volatilities on Oakmark International and Dfa 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 Oakmark International with a short position of Dfa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and Dfa International.
Diversification Opportunities for Oakmark International and Dfa International
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oakmark and Dfa is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Small and Dfa International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa International Small and Oakmark International 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 Oakmark International Small are associated (or correlated) with Dfa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa International Small has no effect on the direction of Oakmark International i.e., Oakmark International and Dfa International go up and down completely randomly.
Pair Corralation between Oakmark International and Dfa International
Assuming the 90 days horizon Oakmark International is expected to generate 2.3 times less return on investment than Dfa International. But when comparing it to its historical volatility, Oakmark International Small is 1.04 times less risky than Dfa International. It trades about 0.02 of its potential returns per unit of risk. Dfa International Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,090 in Dfa International Small on September 1, 2024 and sell it today you would earn a total of 164.00 from holding Dfa International Small or generate 7.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Oakmark International Small vs. Dfa International Small
Performance |
| Timeline |
| Oakmark International |
| Dfa International Small |
Oakmark International and Dfa International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark International and Dfa International
The main advantage of trading using opposite Oakmark International and Dfa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International position performs unexpectedly, Dfa 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 Dfa International will offset losses from the drop in Dfa International's long position.| Oakmark International vs. Oakmark International Fund | Oakmark International vs. Oakmark Global Fund | Oakmark International vs. Oakmark Select Fund | Oakmark International vs. Oakmark Global Select |
| Dfa International vs. Dfa International Value | Dfa International vs. International Small Pany | Dfa International vs. Us Large Cap | Dfa International vs. Us Small Cap |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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