Correlation Between Oakmark International and Northern International
Can any of the company-specific risk be diversified away by investing in both Oakmark International and Northern 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 Northern International 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 Northern International Equity, you can compare the effects of market volatilities on Oakmark International and Northern 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 Northern International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and Northern International.
Diversification Opportunities for Oakmark International and Northern International
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Oakmark and Northern is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Fund and Northern International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern International 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 Northern International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern International has no effect on the direction of Oakmark International i.e., Oakmark International and Northern International go up and down completely randomly.
Pair Corralation between Oakmark International and Northern International
Assuming the 90 days horizon Oakmark International Fund is expected to under-perform the Northern International. In addition to that, Oakmark International is 1.17 times more volatile than Northern International Equity. It trades about -0.03 of its total potential returns per unit of risk. Northern International Equity is currently generating about 0.01 per unit of volatility. If you would invest 1,057 in Northern International Equity on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Northern International Equity or generate 0.19% 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. Northern International Equity
Performance |
| Timeline |
| Oakmark International |
| Northern International |
Oakmark International and Northern International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark International and Northern International
The main advantage of trading using opposite Oakmark International and Northern International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International position performs unexpectedly, Northern 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 Northern International will offset losses from the drop in Northern International'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 |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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