Correlation Between Oakmark International and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Oakmark International and Emerging Markets 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 Emerging Markets 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 Emerging Markets Portfolio, you can compare the effects of market volatilities on Oakmark International and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and Emerging Markets.
Diversification Opportunities for Oakmark International and Emerging Markets
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oakmark and Emerging is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Small and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Por has no effect on the direction of Oakmark International i.e., Oakmark International and Emerging Markets go up and down completely randomly.
Pair Corralation between Oakmark International and Emerging Markets
Assuming the 90 days horizon Oakmark International Small is expected to under-perform the Emerging Markets. But the mutual fund apears to be less risky and, when comparing its historical volatility, Oakmark International Small is 1.15 times less risky than Emerging Markets. The mutual fund trades about -0.39 of its potential returns per unit of risk. The Emerging Markets Portfolio is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 2,882 in Emerging Markets Portfolio on August 26, 2024 and sell it today you would lose (113.00) from holding Emerging Markets Portfolio or give up 3.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oakmark International Small vs. Emerging Markets Portfolio
Performance |
| Timeline |
| Oakmark International |
| Emerging Markets Por |
Oakmark International and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark International and Emerging Markets
The main advantage of trading using opposite Oakmark International and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' 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 |
| Emerging Markets vs. Ab Global E | Emerging Markets vs. Ab Global E | Emerging Markets vs. Ab Global E | Emerging Markets vs. Ab Minnesota Portfolio |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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