Correlation Between Oakmark International and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Oakmark International and Franklin Mutual 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 Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark International Fund and Franklin Mutual European, you can compare the effects of market volatilities on Oakmark International and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and Franklin Mutual.
Diversification Opportunities for Oakmark International and Franklin Mutual
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Oakmark and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Fund and Franklin Mutual European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual European 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 Fund are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual European has no effect on the direction of Oakmark International i.e., Oakmark International and Franklin Mutual go up and down completely randomly.
Pair Corralation between Oakmark International and Franklin Mutual
Assuming the 90 days horizon Oakmark International Fund is expected to generate 1.35 times more return on investment than Franklin Mutual. However, Oakmark International is 1.35 times more volatile than Franklin Mutual European. It trades about 0.02 of its potential returns per unit of risk. Franklin Mutual European is currently generating about -0.01 per unit of risk. If you would invest 2,633 in Oakmark International Fund on September 12, 2024 and sell it today you would earn a total of 25.00 from holding Oakmark International Fund or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oakmark International Fund vs. Franklin Mutual European
Performance |
| Timeline |
| Oakmark International |
| Franklin Mutual European |
Oakmark International and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark International and Franklin Mutual
The main advantage of trading using opposite Oakmark International and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual's long position.| Oakmark International vs. Oakmark Fund Investor | Oakmark International vs. Oakmark Select Fund | Oakmark International vs. Oakmark International Small | Oakmark International vs. Oakmark Global Fund |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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