Correlation Between Oakmark Global and Brandes International
Can any of the company-specific risk be diversified away by investing in both Oakmark Global and Brandes 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 Global and Brandes International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark Global Fund and Brandes International Small, you can compare the effects of market volatilities on Oakmark Global and Brandes 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 Global with a short position of Brandes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark Global and Brandes International.
Diversification Opportunities for Oakmark Global and Brandes International
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oakmark and Brandes is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Global Fund and Brandes International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes International and Oakmark Global 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 Global Fund are associated (or correlated) with Brandes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes International has no effect on the direction of Oakmark Global i.e., Oakmark Global and Brandes International go up and down completely randomly.
Pair Corralation between Oakmark Global and Brandes International
Assuming the 90 days horizon Oakmark Global is expected to generate 6.86 times less return on investment than Brandes International. In addition to that, Oakmark Global is 1.71 times more volatile than Brandes International Small. It trades about 0.02 of its total potential returns per unit of risk. Brandes International Small is currently generating about 0.24 per unit of volatility. If you would invest 1,886 in Brandes International Small on September 13, 2024 and sell it today you would earn a total of 34.00 from holding Brandes International Small or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Oakmark Global Fund vs. Brandes International Small
Performance |
| Timeline |
| Oakmark Global |
| Brandes International |
Oakmark Global and Brandes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark Global and Brandes International
The main advantage of trading using opposite Oakmark Global and Brandes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark Global position performs unexpectedly, Brandes 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 Brandes International will offset losses from the drop in Brandes International's long position.| Oakmark Global vs. Oakmark Equity And | Oakmark Global vs. Oakmark International Small | Oakmark Global vs. Oakmark Select Fund | Oakmark Global vs. Oakmark International Fund |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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