Correlation Between Oakmark International and Oakmark Bond
Can any of the company-specific risk be diversified away by investing in both Oakmark International and Oakmark Bond 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 Oakmark Bond 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 Oakmark Bond, you can compare the effects of market volatilities on Oakmark International and Oakmark Bond 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 Oakmark Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and Oakmark Bond.
Diversification Opportunities for Oakmark International and Oakmark Bond
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oakmark and Oakmark is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Small and Oakmark Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Bond 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 Oakmark Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Bond has no effect on the direction of Oakmark International i.e., Oakmark International and Oakmark Bond go up and down completely randomly.
Pair Corralation between Oakmark International and Oakmark Bond
Assuming the 90 days horizon Oakmark International Small is expected to generate 2.52 times more return on investment than Oakmark Bond. However, Oakmark International is 2.52 times more volatile than Oakmark Bond. It trades about 0.03 of its potential returns per unit of risk. Oakmark Bond is currently generating about 0.05 per unit of risk. If you would invest 1,780 in Oakmark International Small on September 1, 2024 and sell it today you would earn a total of 185.00 from holding Oakmark International Small or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oakmark International Small vs. Oakmark Bond
Performance |
| Timeline |
| Oakmark International |
| Oakmark Bond |
Oakmark International and Oakmark Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark International and Oakmark Bond
The main advantage of trading using opposite Oakmark International and Oakmark Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International position performs unexpectedly, Oakmark Bond 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 Bond will offset losses from the drop in Oakmark Bond'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 |
| Oakmark Bond vs. Oakmark International Fund | Oakmark Bond vs. Oakmark Fund Advisor | Oakmark Bond vs. Oakmark Select Fund | Oakmark Bond 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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